Lac2rffiiit:iiiriiii 


UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


♦  .*) 


SOCIALISM     IN    LOCAL 
GOVERNMENT 


SOCIALISM 

IN 

LOCAL    GOVERNMENT 


BY 

W.   G.  TOWLER 

SECRETARY   OF   THE   LONDON    MUNICIPAL   SOCIETY 

WITH   INTRODUCTION   BY 

CAPTAIN    H.   M.  JESSEL 


SECOND   EDITION 


NEW   YORK 

THE   MACMILLAN   COMPANY 

1909 


Printed  by 

Ballantyne,  Hanson  &^  Co. 

Edinburgh 


>^" 


PREFATORY  NOTE 


•^ 


This  book  is,  in  one  important  respect,  a  novel 
departure.  From  time  to  time  various  writers  have 
dealt,  more  or  less  fully,  with  single  phases  of  the 

'^  question.  The  greater  extent  of  the  field  of  investi- 
^V^  gation  opened  to  the  author  by  his  daily  pursuits 
during  the  past  fifteen  years  has  led  him  to  deal  at 
least  comprehensively,  if  not  exhaustively,  with  the 
whole  subject.  It  is,  so  far  as  he  is  aware,  the  first 
systematic  effort  to  deal  with  the  silent  and  almost 
unobserved  invasion  of  British  Local  Government  by 
the  forces  of  Modern  Socialism. 

^         A    decade   hence,   perhaps,  the   student   of  social 
^   growth  will    look   back    from   a   position   of   detach- 

^    ment    upon  the    attempt    to    apply   the    theories    of 

(^  Socialism  to  Society,  and  will  discern  two  well- 
defined,  but  linked,  lines  of  advance.  The  first, 
following  legislative  channels,  is  outside  our  pur- 
view ;  the  other,  and  more  effective  one,  is  through 
all  the  avenues  of  power  and  authority  in  the  domain 
of  civic  administration. 

The  future  observer  will,  no  doubt,  also  realise 
more  clearly  than  we  do  now  the  vast  process  of 
change  thus  wrought  in  the  social  structure.  He 
will  be  better  able  than  we  are  to  estimate  its 
characteristic  features,  to  analyse  its  results,  and 
to  explain  its  full  meaning.      Nevertheless,  it  will  be 

sosisi. 


Prefatory  Note 


then  beyond  his  power  to  sway  ever   so    little   the 
course  of  things. 

By  furnishing  some  definite  view  of  the  remark- 
able position  towards  which  Socialism  in  Local 
Government  has  been  so  far  carried,  by  indicating 
the  evil  consequences  of  the  movement,  and  offering 
suggestions  for  an  alternative  policy,  the  author  hopes 
to  help,  in  some  degree,  that  large  section  of  the 
community,  comprising  all  classes,  which  is  only 
now  slowly  apprehending  the  new  Socialist  move- 
ment, and  is  preparing,  at  a  late  hour,  for  a  dogged, 
prolonged,  and  bitter  resistance  to  it. 

W.  G.  T. 

October,  1908. 


VI 


CONTENTS 


Introductory  Note       .... 

I.  The  Aim  of  Administrative  Socialism 

II.  The  New  Heptarchy    .... 

III.  The  History  of  Municipal  Trading  . 

IV.  The  Extent  of  Municipal  Trading  . 
V.  The  Opposition  to  Inquiry 

VI.  The  Financial  Aspect 
VII.  Price  and  Quality  of  Service    . 
VIII.  Public  versus  Private  Enterprise    . 
IX.  The  Lesson  of  State  Enterprise 
X.  The    Effect    upon    National    Character 
and  Progress 
XI.  The  Question  of  Monopoly 
Xn.  Labour  and  Politics    . 
XIII.  Municipal  Housing 
XIV.  Municipal  Works  Departments 
XV.  An  Alternative  Policy 
XVI.  Socialism  in  Education 
XVII.  Socialism  in  the  Poor  Law 
XVIII.  The  Right  to  Work    . 

XIX.  Municipalisation  of  the  "  Drink  Traffic 
XX.  Conclusions  .... 

Index     .         .         . 


IX 

I 
13 

23 
32 

40 

45 
83 
96 

109 

136 
164 
178 
200 
218 
231 
246 
267 
276 

305 
312 

327 


vu 


INTRODUCTORY    NOTE 

The  success  of  The  Case  Against  Socialism,  issued 
under  the  auspices  of  the  London  Municipal  Society 
in  the  early  part  of  1908,  has  encouraged  the 
Society  to  promote  the  publication  of  the  present 
volume. 

Mr.  Balfour,  in  his  prefatory  letter  to  the  former 
book,  observed  that  the  controversy  "  is  one  vital  to 
the  welfare  of  Society,  and  it  has  now  come  down 
from  the  study  of  the  theorist  to  the  market-place 
and  the  street  corner." 

Socialism  is  not  merely  the  topic  of  the  open-air 
orator  ;  it  is  actually  being  put  into  practice  in  Local 
Government.  Instead  of  blowing  bubbles  in  the 
parks,  the  Administrative  Socialist  uses  the  machinery 
of  local  administration  for  the  realisation  of  his 
theories.  Municipal  Socialism  is  very  real,  and 
high  rates  bring  the  fact  home  to  all  classes  of  the 
community. 

It  may  be  justly  asked,  what  are  the  reasons  that 

have  weighed  with  the  Society  in  inducing  them  to 

undertake  so  great  a  task  as  is  involved  in  combating 

Socialism  ?     The  answer  is,  that  it  is  impossible  to 

draw  a  dividing  line   between    State   Socialism   and 

Socialism  in  Municipal  Government. 

ix 


Introductory  Note 


The  Society  was  established  in  1894  for  the 
purpose  of  uniting  all  who  were  opposed  to  the 
extreme  ideas  advocated  by  the  Progressive-Socialist 
majority  on  the  London  County  Council  and  other 
bodies. 

Since  its  foundation,  the  Society  has  been  engaged 
in  a  systematic  study  of  London  questions.  It  has 
been  persistent  in  its  efforts  to  bring  to  the  notice 
of  Londoners  the  extravagance  of  the  schemes  of 
the  so-called  party  of  Progress.  Unfortunately,  for 
eighteen  years  the  Progressive-Socialists  maintained 
their  power  in  London  Government.  The  crash 
came  in  1906-7.  On  the  Borough  Councils,  on 
the  County  Council,  and  on  many  Boards  of  Guar- 
dians, the  Municipal  Reformers  were  returned  by 
large  majorities. 

The  turnover  of  public  opinion  in  London  was 
remarkable,  and  the  Society  can  justly  claim  the 
credit  for  the  change  by  which,  at  last,  the  seething 
discontent  in  the  minds  of  the  overburdened  rate- 
payers was  translated  into  action  at  the  polls. 

It  is  curious  that  the  creation  of  the  London 
County  Council  was  an  afterthought  in  the  Bill  of 
1888.  The  Extremists  themselves  were  surprised 
and  astonished  at  the  policy  of  the  Conservative 
administration  by  which  the  Government  of  the 
greatest  Metropolis  in  the  world  was  handed  over 
without  any  previous  preparation  to  the  uninstructed 
voter.     As   a   result,  the  policy  of  exploitation — the 


X 


Introductory   Note 

principles  of  permeation  preached  by  the  followers  of 
the  Fabian  Society  and  by  other  Socialists — were  at 
once  put  into  action,  and  the  whole  tendency  of  the 
Council,  until  March,  1907,  was  a  steady  drift  towards 
Collectivism. 

No  municipal  institution  in  the  world  is  compar- 
able to  the  London  County  Council  as  regards  the 
magnitude  of  its  operations,  the  variety  of  interests 
which  it  affects,  its  influence  and  example  to  other 
municipalities,  whether  in  the  United  Kingdom  or  in 
other  parts  of  the  Empire. 

Few  people,  even  among  those  who  have  served 
on  the  Council  from  the  commencement,  have  so 
precise  a  knowledge,  and  so  intimate  an  acquaint- 
ance, with  the  various  questions  brought  from  time 
to  time  before  the  Council  as  the  author  of  this 
volume,  who  has  been  connected  with  the  Society 
for  fifteen  years.  It  has,  therefore,  been  an  easy 
task  for  him  with  his  experience  of  London  govern- 
ment to  treat  of  Municipal  Socialism  as  a  whole. 

What  does  he  seek  to  prove  ?  Firstly,  that 
municipal  trading  does  not  pay  ;  and,  secondly,  that 
the  Socialists  intend  to  use  the  power  they  have 
obtained  in  the  sphere  of  Local  Government  to  put 
their  larger  ideas  into  practice.  "  The  path  to  the 
Town  Utopia  of  Collectivism,"  says  Mr.  Sidney 
Webb  {Fabian  Tract,  No.  57),  "is  unlimited  muni- 
cipalisation  of  local  public  services  and  a  wide 
extension  of  co-operate  activity." 


XI 


Introductory  Note 

Is  not  a  more  scientific  treatment  of  services 
dealing  with  monopolies  possible  ? 

We  are  taken  through  accounts  of  electric  lighting, 
tramways,  and  other  trading  concerns,  and  any  one 
who  reads  these  chapters  must  admit  that  the  writer 
has  proved  his  case. 

In  Chapter  XV.  it  is  shown  how  the  franchises 
for  public  monopolies  are  dealt  with  in  France  and 
Germany — in  one  case  by  lease  for  a  term  of  years, 
and  in  the  other  by  regulation  and  division  of  profits. 

Surely  the  function  and  labour  of  administration 
in  Local  Government  are  sufficient  without  the 
further  burden  of  commercial  concerns.  The  fifty- 
fifth  number  of  the  Statistical  Abstract  of  the  United 
Kingdom,  which  has  just  been  issued,  states  that 
the  total  outstanding  loans  of  local  authorities  at 
the  end  of  the  financial  year  1905-6  amounted 
to  ^£564,645, 200.  In  1883-4,  the  total  indebted- 
ness was  ;^i92,995,873.  The  increase  in  twenty-two 
years,  therefore,  amounts  to  ;^37i,649,327.  The 
figures  for  the  three  kingdoms  are  as  follows : — 

1883-4.  1905-6. 

England  and  Wales     .     ^164,879,947  ^482,983,929 
Scotland       .         .         .          21,884,092  63,075,020 

Ireland         .         .         .  6,231,834  18,586,251 


^192,995,873         ;^564,645,20o 

The    indebtedness     of     England     and     Wales     in 

1905-6  includes  the  sum  of  ^^47, 438, 85 2  in  respect 

of  loans  of   the    Metropolitan    Water    Board.      The 

xii 


Introductory  Note 

National  Debt  in  1883-4  "^^^  ;^745,645,953,  and 
in  1905-6,  ^788,990,187.  The  increase  in  twenty- 
two  years  has  amounted  to  ^^43, 344,234. 

It  is  to  be  feared  that,  owing  to  the  action  of 
Parhament  in  placing  increased  duties  on  local 
authorities,  there  will  be  a  greater  temptation  than 
ever  to  undertake  commercial  enterprises. 

If  a  study  of  this  interesting  book  has  the  effect 
of  making  the  public  realise  the  fact  that  municipal 
trading  is  a  failure,  and  how  perilous  to  the  welfare 
of  the  nation  are  the  specious  proposals  of  the 
Socialists,  the  author  will  not  have  studied  and 
written   in  vain. 

H.  M.  JESSEL, 

Chairman  of  the  Council  of  the  Londo7t 
Alunicipal  Society. 
November^  1908. 


xni 


"  Municipal  Socialism  is  one  of  the  gravest  and 
most  insidious  maladies  nvhich  now  threatens 
modern  civilisation" 

— Paul  Leroy-Beaulieu 


I 


THE   AIM    OF    ADMINISTRATIVE 
SOCIALISM 

Socialism  has  ceased  to  be  an  occasional  topic  for 
academic  discussion  in  literary  and  debating  societies, 
and  the  subject  of  loud-voiced  oratory  and  turbulent 
imagery  in  our  public  parks.  It  is  no  mere  shadow- 
fight,  but  a  real  conflict  that  now  engages  and  in- 
volves the  British  nation.  The  contending  forces 
have  passed  through  the  skirmishing  stages.  Affairs 
of  outposts  daily  become  more  serious  as  the  armies 
form  up  for  the  battle.  On  the  one  hand  we  have 
the  Socialist  array,  well  equipped  and  trained,  with  a 
general  end  in  view.  Though  differences  of  opinion 
exist  in  its  ranks,  Socialism  moves  rapidly  to  its  goal. 
On  the  other  hand,  the. two  great  political  parties  in 
the  State,  engaged  in  their  own  quarrel,  have  been 
taken  unawares,  and  even  now  are  in  some  doubt  as 
to  how  to  fight  their  common  enemy. 

It  therefore  behoves  them  to  examine  not 
merely  the  Socialist  equipment,  but  its  plan  of 
campaign. 

For  it  is  worthy  of  notice  that  critics  of  Socialism, 
in  valuing  its  forces,  have  been  too  indifferent  to  their 
direction.     While  passing  judgment  upon  their  paper 

I  A 


Socialism  in  Local  Government 

proposals,  they  have  neglected  the  twofold  and  prac- 
tical line  of  advance  adopted  by  these  theorists  who 
desire  to  overthrow  the  accumulated  result  of  ages 
in  order  to  substitute  the  fancies  of  a  day. 

Now,  Socialism  travels  along  two  routes : — the 
one  by  Parliamentary  power,  and,  as  a  consequence, 
Socialistic  legislation  ;  the  other,  by  capturing  Local 
Government,  and  using  its  machinery  to  establish  a 
Socialistic  State,  mainly  through  the  gradual  transfer 
of  various  enterprises  from  private  to  public  owner- 
ship and  management.  While  the  first  line  of  advance 
is  unconcealed,  the  second  is  to  a  large  extent  secret 
and  unseen  by  the  general  public,  or,  if  detected,  is 
often  mistaken  for  anything  but  a  Socialistic  move. 
It  is  a  remarkable  instance  of  the  erroneous  values 
of  public  opinion  that  the  election  of  a  small  but 
active  band  of  Socialists  to  Parliament  in  1906 
should  have  so  struck  the  country  with  affright, 
while  the  slow  but  steady  development  of  Socialism 
in  Local  Government  during  the  past  thirty  years 
has  been  almost  unregarded,  and  has  excited  the 
alarm  of  only  a  few  people.  With  that  invasion  of 
Local  Government  this  book  is  concerned. 

Accepting  the  broad  generalisation  that  the  present 
policy  of  Socialism  is  State  ownership  and  adminis- 
tration of  the  means  of  production,  distribution,  and 
exchange,  it  is  necessary,  before  coming  to  close 
quarters  with  our  subject,  to  take  a  cursory  view  of 
the  Socialist  position. 

The  British  Socialist  of  the  present  time  may  be 
divided  into  two  classes : — 

I.  The  Revolutionary  class,  comprising  the  Social 


The  Aim  of  Administrative  Socialism 

Democrats,  the  Clarion  Fellowship,  and  the  Socialist 
Party  of  Great  Britain. 

2.  The  Administrative — or  Evolutionary — class, 
comprising  the  Fabian  Socialists,  the  Independent 
Labour  Party,  and  several  minor  bodies. 

The  first,  and  older,  section  are  disciples  of  Karl 
Marx,  and  believe  that  their  ideal  will  arrive  by 
social  convulsion.  They  preach  the  Class  War,  and 
trust  largely  in  Fate.  To  them,  ''  Municipalism," 
"  like  the  Trusts,  is  only  a  development  of  Capitalism, 
and  is  run  in  the  interest  of  the  capitalist  class. 
But  it  is  Capitalism  in  its  most  advanced  stage.  It 
is  a  form  of  collectivism  ;  it  demonstrates  the  prac- 
ticability of  public  collective  ownership,  and  supplies, 
as  we  have  said,  the  embryo  of  the  industrial  organi- 
sation of  Socialist  Society,  When  industries  reach 
the  Company  form,  they  are  ripe  for  socialisation, 
and  the  S.D.F.  stands  for  the  municipalisation  and 
nationalisation  of  all  monopolies  as  a  step  further 
towards  the  complete  socialisation  of  all  industries, 
and  of  all  the  means  and  instruments  of  production."^ 
Or,  to  quote  the  '' Manifesto  of  the  Joint  Committee 
of  Socialistic  Bodies"  (1893),  "Municipalisation,  for 
instance,  can  only  be  accepted  as  Socialism  on  the 
condition  of  its  forming  a  part  of  national,  and  at 
last,  of  international  Socialism."  In  effect,  the  Re- 
volutionists are  lukewarm  advocates  of  Municipal 
Socialism.  It  plays  only  a  subsidiary  part  in  their 
long  programme,  where  their  civic  objects  chiefly 
relate  to  "  public  ownership  and  control  of  gas,  light, 
and  water  supply  .  .  .  tramways,) omnibus,  and  other 

*  "  The  Social  Democratic  Federation,  Its  Objects,  Its  Principles,  and 
Its  Work." 

3 


Socialism  in  Local  Government 

locomotive  services  .  .  .  food  and  coal  supply  .  .  . 
municipal  banks  and  pawnshops  and  public  res- 
taurants .  .  .  hospitals,  dispensaries,  cemeteries  and 
crematoria." 

It  is  not,  therefore,  the  noisy  and  implacable 
demagogues  of  the  Social  Democratic  Federation 
who  threaten  the  most  danger  to  Society.  It  is  the 
second  class — the  Administrative  or  Evolutionary 
Socialists  of  the  Fabian  Society,  and  the  Labour 
Party — that  constitutes  the  gravest  peril.  These 
latter  bodies  have  been  working  with  an  activity  the 
more  dangerous  because  less  noisy,  the  more  effective 
because  disguised.  In  their  idea,  Socialism  is  to 
arrive,  not  by  red  revolution,  but  "  by  the  gradual 
and  detailed  concession  of  its  propositions."  Their 
insidious  spirit,  like  certain  diseases  of  the  human 
body,  has  established  itself  in  the  body  politic  un- 
observed, and  has  gradually  worked  itself  into  pos- 
session of  the  vital  organs,  until  the  death  of  private 
enterprise  seems  the  certain  end. 

The  legislation  of  the  past  four  years  indicates  an 
amazing  advance  in  the  adoption  of  Socialistic  ideas. 
The  Unemployed  Workmen  Bill,  the  Relief  (School 
Children)  Order  of  1905,  the  Feeding  of  School  Child- 
ren Act,  1906,  the  Medical  Inspection  of  School  Child- 
ren, which  is  included  in  the  Administrative  Provisions 
(Education)  Act,  1907,  and  the  Old  Age  Pensions 
Act  of  1908,  are  all  measures  tending  towards,  in- 
deed inevitably  involving,  the  Socialistic  principle  of 
"  equalisation  of  advantages  among  all  classes "  ; 
which,  being  interpreted,  means  granting  benefits  to 
the  masses  at  the  expense  of  the  whole  community, 

4 


The  Aim  of  Administrative  Socialism 

and  without  any  real  attempt  to  discriminate  between 
deserving  and  undeserving,  or  to  require  any  return 
from  the  individual  for  the  State  service  so  rendered. 

We  can  scarcely  realise  how  extensive  has  been 
the  changes  going  on  in  Local  Government,  and  to 
what  an  important  degree  the  system  of  private 
enterprise  and  individual  responsibility  has  been 
transformed  by  the  introduction  of  Socialistic  in- 
fluences. 

"The  general  failure  to  realise  the  extent  to  which 
our  unconscious  Socialism  has  already  proceeded 
...  is  due  to  the  fact  that  few  know  anything  of 
local  administration  outside  their  own  town.  It  is 
the  municipalities  which  have  done  most  to  '  socialise ' 
our  industrial  life."  ^ 

What  have  been  the  means  employed  ?  The  answer 
is  "  Fabian  Socialism."  The  object  of  the  Fabian 
Society  is  "  the  reorganisation  of  Society  by  the 
emancipation  of  Land  and  Industrial  Capital  from 
individual  and  class  ownership,  and  the  vesting  of 
them  in  the  community  for  the  general  benefit." 

The  Fabian  methods  of  action  are  admirably 
described  by  Mr.  G.  Bernard  Shaw  in  Fabian  Trad, 
No.  41,  entitled  "The  Fabian  Society,  its  Early 
History."  Revolutionary  in  its  early  stages,  it  soon 
settled  down  to  a  persistent  policy  of  "  permeation." 
If  unable  to  put  forward  Socialistic  candidates  for 
Parliamentary  and  municipal  elections,  it  confined 
itself  "  to  supporting  those  candidates  who  will  go 
furthest  in  the  direction  of  Socialism.  ...  It  will 
endeavour  to  secure  the  recognition  of  the  Socialist 
principle  in  all  the  details  of  local  government.  .  .  . 
^  "  Bases  of  Socialism"  {Fabian  Essays,  S.  Webb),  p.  50. 

5 


Socialism  in  Local  Government 

By  steady  work  on  these  and  similar  lines,  Socialists 
will  increase  their  power  in  the  community,  and  will 
before  long  be  able  to  influence  effectively  the  course 
of  public  opinion.  .  .  .  We  urged  our  members  to 
join  the  Liberal  and  Radical  Associations  of  their 
districts,  or,  if  they  preferred  it,  the  Conservative 
Associations,  We  told  them  to  become  members 
of  the  nearest  Radical  Club  and  Co-operative  Store, 
and  to  get  delegated  to  the  Metropolitan  Radical 
Federation  and  the  Liberal  and  Radical  Union  if 
possible.  .  .  .  We  permeated  the  party  organisations 
and  pulled  all  the  wires  we  could  lay  our  hands  on 
with  our  utmost  adroitness  and  energy,  and  we  suc- 
ceeded so  far  that  in  1888  we  gained  the  solid 
advantage  of  a  Progressive  majority,  full  of  ideas 
that  would  never  have  come  into  their  heads  had 
not  the  Fabian  put  them  there,  on  the  first  London 
County  Council.  The  generalship  of  this  movement 
was  undertaken  chiefly  by  Sidney  Webb,  who  played 
such  bewildering  conjuring  tricks  with  the  Liberal 
thimbles  and  the  Fabian  peas,  that  to  this  day  both 
the  Liberals  and  the  sectarian  Socialists  stand  aghast 
at  him.  It  was  exciting  while  it  lasted,  all  this  '  per- 
meation of  the  Liberal  Party  '  as  it  was  called  ;  and 
no  person  with  the  smallest  political  intelligence  is 
likely  to  deny  that  it  made  a  foothold  for  us  in  the 
Press,  and  pushed  forward  Socialism  in  municipal 
politics  to  an  extent  which  can  only  be  appreciated 
by  those  who  remember  how  things  stood  before 
our  campaign." 

As  evidence  of  "  the  extent  to  which  the  policy  of 
permeating  the  party  organisations  with  Socialism 
had  succeeded,"   Mr.  Shaw  quotes  the    Liberal  and 

6 


The  Aim  of  Administrative  Socialism 

Radical  Union  programme  for  the  1892  London 
County  Council  Election.  It  is  no  wonder  that  in 
his  later  work  on  TJie  Coini>wn  Sense  of  Mtmicipal 
Tradings  Mr.  Shaw  states  that  "  Municipal  Socialism 
is  really  on  foot  among  us  under  the  name  of  Pro- 
gressivism,"  and  that  the  London  County  Council 
has  been  described  as  "The  nursing  mother  of 
Socialism."  In  a  word,  Fabian  tactics  may  be  de- 
scribed as  advancing  inch  by  inch,  sometimes  retreat- 
ing, but  ever  ready  to  help  forward  any  movement 
in  the  direction  of  Socialism.  "We  do  not  hold 
aloof  from  Radicalism,  Trade  Unionism,  or  any  of 
the  movements  which  are  traditionally  individual- 
istic. .  .  .  Whilst  our  backers  at  the  polls  are  counted 
by  tens,  we  must  continue  to  crawl  and  drudge  and 
lecture  as  best  we  can.  When  they  are  counted  by 
hundreds  we  can  permeate  and  trim  and  compro- 
mise. When  they  rise  to  tens  of  thousands  we  shall 
take  the  field  as  an  independent  party.  Give  us 
hundreds  of  thousands,  as  you  can  if  you  try  hard 
enough,  and  we  will  ride  the  whirlwind  and  direct 
the  storm."  ^ 

"Wise  prophets  nowadays  do  not  found  a  partial 
community.  .  .  .  Genuine  Socialism  grows  by  ver- 
tical instead  of  horizontal  expansion  ;  we  must  make 
ever  more  Socialistic  the  institutions  amid  which  we 
live,  instead  of  expecting  them  to  be  suddenly  super- 
seded by  any  new  set  imported  from  elsewhere."  ^ 

The  instruments  to  be  used  in  building  up  the 
Socialist  State  are  "  the  public  authorities,  parochial, 

^   The  Fabian  Society,  Shaw,  p.  28. 

2  "Socialism  True  and  False,"  S.  Webb.     Fabian  Trad,  No.  51. 

7 


Socialism  in  Local   Government 

municipal,  provincial  or  central."  "The  division  of 
the  country  into  clearly  defined  areas,  each  with  its 
elected  authority,  is  essential  to  any  effective  scheme 
of  organisation.  It  is  one  of  the  symptoms  of  the 
coming  change  that,  in  perfect  unconsciousness  of 
the  nature  of  his  act,  Mr.  Ritchie  has  established  the 
Commune.  He  has  divided  England  into  districts 
ruled  by  County  Councils,  and  has  thus  created  the 
machinery  without  which  Socialism  was  impracti- 
cable. True,  he  has  only  made  an  outline  which 
needs  to  be  filled  in,  but  Socialists  can  fill  in,  whereas 
they  had  no  power  to  outline.  It  remains  to  give 
every  adult  a  vote  in  the  election  of  Councillors  ;  to 
shorten  their  term  of  office  to  a  year  ;  to  pay  the 
Councillors,  so  that  the  public  may  have  a  right  to 
the  whole  of  their  working  time  ;  to  give  the  Councils 
power  to  take  and  hold  land  —  a  reform  already 
asked  for  by  the  Liberal  and  Radical  Union,  a  body 
not  consciously  Socialist  ;  and  to  remove  all  legal 
restrictions,  so  as  to  leave  them  as  free  to  act  cor- 
porately  as  an  individual  is  to  act  individually.  These 
measures  accomplished,  the  rapidity  with  which  our 
institutions  are  socialised  depends  on  the  growth  of 
Socialism  among  the  people.  It  is  essential  to  the 
stability  of  the  changed  forms  of  industry  that  they 
shall  be  made  by  the  people,  not  imposed  upon 
them  ;  hence  the  value  of  Mr.  Ritchie's  gift  of  Local 
Government — enabling  each  locality  to  move  swiftly 
or  slowly,  to  experiment  on  a  comparatively  small 
scale,  even  to  blunder  w^ithout  widespread  disaster. 
The  mot  dordre  for  Socialists  now  is  '  Convert  the 
electors ;  and  capture  the  County  Councils.'  These 
Councils,  administering  local  affairs  . .  .  are  all  destined 

8 


The  Aim  of  Administrative  Socialism 

to  be  turned  into  effective  industrial  organisers  ;  and 
the  unit  of  administration  must  depend  on  the  nature 
of  the  industry." 

The  hues  upon  which  the  battle  between  Capital 
and  the  Socialist  Municipalities  will  be  fought  are 
thus  indicated : — "  In  face  of  the  orderly  communal 
arrays,  playing  into  each  other's  hands,  with  the 
credit  of  the  country  behind  them,  the  ventures  of 
the  private  capitalist  will  be  at  as  great  a  disadvantage 
as  the  cottage  industries  of  the  last  century  in  face  of 
the  factory  industries  of  our  own  period.  The  Trusts 
have  taught  us  how  to  drive  competing  capitals  out 
of  the  market  by  associated  capitals.  The  Central 
Boards  or  County  Councils  will  be  able  to  utilise 
this  power  of  association  further  than  any  private 
capitalists.  Thus  the  economic  forces  which  replaced 
the  workshop  by  the  factory  will  replace  the  private 
shop  by  the  municipal  store,  and  the  private  factory 
by  the  municipal  one." 

"  At  present  the  State  machinery  has  practically 
broken  down  under  the  strain  of  spreading  demo- 
cracy, the  work  being  mainly  local,  and  the  machinery 
mainly  central.  Without  efficient  local  machinery 
the  replacing  of  private  enterprise  by  State  enterprise 
is  out  of  the  question  ;  and  we  shall  presently  see 
that  such  replacement  is  one  of  the  inevitable  con- 
sequences of  Democracy.  A  democratic  State  can- 
not become  a  5oa«/- Democratic  State  unless  it  has 
in  every  centre  of  population  a  local  governing  body 
as  thoroughly  democratic  in  its  constitution  as  the 
central  Parliament.  This  matter  is  also  well  in  train. 
In  1888  a  Government,  avowedly  reactionary,  passed 
a  Local  Government   Bill  which  effected  a  distinct 

9 


Socialism  in  Local  Government 

advance  towards  the  democratic  municipality.  It 
was  furthermore  a  Bill  with  no  single  aspect  of 
finality  anywhere  about  it.  Local  Self-Government 
remains  prominent  within  the  sphere  of  practical 
politics.  When  it  is  achieved,  the  democratic  State 
will  have  the  machinery  for  Socialism." 

The  municipal  programme  of  the  Fabian  Society 
is  strangely  akin  to  that  adopted  by  the  International 
Socialist  Workers  and  Trade  Union  Congress  held  in 
London  in  1896. 

"  The  immediate  municipalisation  of  the  supply  of 
water,  gas,  electric  light  ;  of  docks,  markets,  tram- 
ways, omnibus  services,  and  pawnbroking  ;  lake  and 
river  steamboat  services ;  and  of  all  other  local 
monopolies." 

"The  immediate  undertaking  by  public  authorities 
of :  (a)  the  manufacture  and  retailing  of  tobacco  and 
bread  ;  of  the  supply  of  coal,  milk,  and  other  universal 
necessaries  ;  and  of  the  building  of  dwellings  for  the 
workers  ;  (b)  the  manufacture  and  retailing  of  alco- 
holic drinks." 

Moreover,  when  we  turn  to  the  Trade  Unions  with 
their  powerful  organisation  and  immense  voting  in- 
fluence, we  find  that  they  have  pursued  an  almost 
parallel  course  with  Administrative  Socialism.  At 
various  Trade  Unions'  Conferences  held  in  the  past 
fifteen  years,  resolutions  have  been  passed  in  favour 
of  municipal  collectivism.  The  most  important  of 
these  decisions  by  "  the  Parliament  of  Labour  "  was 
the  one  given  at  the  memorable  Conference  of  1893, 
when  it  was  determined  by  an  overwhelming  majority 
to  establish  a  fund  to  assist  candidates  in  local  (and 
Parliamentary)  elections,  and  to  give  financial  help 

10 


The  Aim  of  Administrative  Socialism 

to  other  candidates  pledged  to  support  the  principle 
of  collective  ownership  and  control  of  all  the  means 
of  production  and  distribution.  As  a  result,  there 
was  set  on  foot  a  Municipal  Labour-Socialist  Party, 
which  has  made  remarkable  progress,  and  which 
wields  considerable  power  in  the  sphere  of  Local 
Government. 

In  Parliament,  an  unsuccessful  attempt  was  made 
in  1906  to  remove  all  restraint  or  control  of  munici- 
palities by  the  legislature,  and  to  confer  upon  them 
unlimited  powers  of  trading.  The  Municipal  Powers 
Bill,  introduced  into  the  House  of  Commons  by  Sir 
Charles  Dilke,  Mr.  Alden,  Mr.  G.  P.  Gooch,  and  Mr. 
A.  Henderson,  was  prefaced  by  a  summary  of  its 
provisions. 

"  This  Bill  is  designed  to  widen  and  enlarge  the 
powers  of  local  authorities  in  respect  of  the  purchase 
of  land,  the  building  of  houses,  and  especially  the 
acquisition  or  establishment  of  trading  undertakings. 
It  in  no  way  touches  questions  of  taxation  or  finance, 
leaving  the  powers  of  municipalities  in  these  respects 
exactly  as  they  are  at  present.  Generally  this  Bill 
frees  municipalities  from  the  necessity  of  going  to 
Parliament  for  powers  to  enter  into  new  enterprises. 
Under  the  powers  which  it  confers,  a  local  authority 
may  acquire  or  establish  and  carry  on  within  or 
without  its  area  a  traffic  business,  a  manufacturing 
business,  a  commercial  business,  a  banking  business, 
an  insurance  business,  or  any  other  business  or  in- 
dustry whatever.  The  Bill  vetoes  the  sale  of  any 
business  carried  on  under  its  provisions  to  any  but 
another  local  authority.  It  is  provided  that  any  rent, 
profits,  or  interest   arising   from   land,  buildings,  or 

II 


Socialism  in  Local  Government 

businesses  acquired  or  established  under  this  Bill 
shall  in  the  first  place  be  applied  to  the  repayment 
of  any  capital  which  may  be  borrowed  for  its 
purposes." 

Beyond  the  particular  object  of  Municipal  Trading, 
which  is  the  main  weapon  of  the  Administrative 
Socialist,  subsidiary  movements  are  being  made 
towards  the  State  and  Municipal  regulation  of  the 
whole  sphere  of  private  right  and  personal  responsi- 
bility. These  have  taken  definite  shape  in  an  en- 
deavour to  force  Parliament  to  acknowledge  the 
Socialist  doctrine  of  "  the  Right  to  Work,"  and  in 
the  new  duties  imposed  upon  Local  Authorities  with 
regard  to  the  feeding  of  necessitous  scholars,  and  the 
medical  inspection  and  treatment  of  school  children. 

With  "  Opportunism "  as  its  motto,  it  cannot  be 
denied  that  Administrative  Socialism  has  obtained  a 
hold  upon  men  of  every  political  and  municipal 
party,  and  men  of  no  party  at  all,  to  a  remarkable 
degree.  Without  exaggeration  it  may  be  said  that 
these  waiters  upon  occasion  and  opportunity  have 
done  more  to  establish  Socialism  in  Great  Britain 
than  all  the  efforts  of  the  revolutionary  Social-Demo- 
crats, and  other  advocates  of  violent  measures. 


12 


II 

THE    NEW    HEPTARCHY 

Before  proceeding  to  examine  the  particular  activi- 
ties of  the  Administrative  SociaHsts  in  the  domain 
of  Local  Government,  let  us  glance  briefly  at  their 
proposed  reform  of  the  machinery  by  which  they 
hope  to  attain  their  ends. 

The  Fabian  Municipal  movement  made  rapid 
strides  between  1888  and  1903.  Then  two  new 
considerations  arose.  In  the  first  place,  it  became 
quite  apparent  that  the  weight  of  industrial  responsi- 
bihty  would  become  a  burden  too  heavy  to  be  borne 
by  the  existing  local  authorities.  In  the  second 
place,  it  was  seen  that  the  control  and  management 
of  large  public  services,  such  as  water,  light,  and 
transit,  was  impossible  by  municipal  bodies,  unless 
their  areas  were  vastly  enlarged.  Geographical  limita- 
tions were  found  to  be  formidable  obstacles  to  the 
plea  of  great  towns  that  they  should  own  and  work 
these  large  common  concerns.  It  is  true  that  the 
difficulty  had  been  overcome  in  some  respects  by 
local  authorities  obtaining  powers  to  serve  adjoining 
districts.  But  these  arrangements  were  seldom  made 
without  long  delay,  much  haggling,  and  often  incon- 
venient compromises. 

A  notable  example  of  this  difficulty  is  presented 

13 


Socialism  in  Local  Government 

by  the  London  Water  Supply.  Though  strenuous 
efforts  were  made  by  the  London  County  Council  to 
establish  a  right  to  administer  that  service,  the  legis- 
lature found  it  undesirable  to  place  upon  London's 
Central  Authority  the  administration  of  the  various 
water  undertakings  covering  an  area  of  537  square 
miles,  nearly  five  times  the  size  of  the  present  London 
area.  Therefore  a  special  body,  the  Metropolitan 
Water  Board,  had  to  be  constituted  for  the  purpose 
of  acquiring  and  managing  the  water  supply  of  the 
capital  of  the  British  Empire.  In  the  case  of  the 
tramways,  too,  all  hope  of  establishing  a  thoroughly 
comprehensive  and  unified  system  of  transit  from 
central  to  outer  London  and  the  Home  Counties, 
vanished  when  the  London  County  Council  became 
the  tramway  authority  for  London,  and  Middlesex 
and  other  adjoining  counties  were  covered  with  other 
and  separate  public  and  semi-public  tramway  systems. 
The  provision  of  electricity  has  offered  the  same 
difficulty.  First,  it  was  thought  that  the  area  of  a 
Borough  Council  was  a  proper  and  sufficient  unit 
for  an  electric  light  undertaking.  Then  came  a 
revolutionary  change  in  the  methods  of  electrical 
production.  It  was  found  more  economical  to  take 
a  county,  or  an  aggregation  of  counties,  as  the  unit 
for  the  supply  of  electricity  in  bulk  for  manufacturing, 
lighting,  and  transit  purposes.  As  in  the  case  of  the 
Water  Supply,  the  London  County  Council  was 
barred  from  becoming  the  electrical  authority  for 
Greater  London,  mainly  on  the  ground  that  it  could 
not  appropriate,  as  the  unit  for  electric  bulk  supply, 
an  area  six  times  as  large  as  its  own. 

Another  instance  of  this  inadequacy  of  municipal 

14 


The  New  Heptarchy 

areas  is  the  ill-fated  municipal  telephone  services. 
In  recent  times,  some  seven  towns,  among  them 
Glasgow  and  Tunbridge  Wells,  established  systems, 
most  of  which,  after  a  short  chequered  career,  were 
purchased  by  the  Post  OfBce,  or  the  National  Tele- 
phone Company,  on  terms  involving  in  some  cases 
a  loss  to  the  towns. 

The  Administrative  Socialist,  therefore,  found  him- 
self in  this  predicament  ;  however  strong  his  claim 
to  municipalise  these  great  communal  services,  he 
was  defeated  by  geographical  limitations.  The  in- 
creasing enlargement  of  industrial  operations  over- 
running municipal  frontiers,  necessarily  restricted 
municipal  activity.  Not  only  did  it  stop  the  advance 
of  Administrative  Socialism,  but  it  threatened  to 
invade  territory  already  occupied  by  the  munici- 
palities. Hence  the  Fabian  Socialist  has  abandoned 
for  the  moment  his  effort  to  municipalise,  and  is 
seeking  to  alter  the  fabric  of  Local  Government. 
All  the  principles  which  have  hitherto  governed  the 
size  of  local  areas  are  to  be  overthrown.  "  One 
of  the  first  points,  if  not  tJie  first  point,  to  be  con- 
sidered in  connection  with  any  further  extension 
of  the  powers  of  municipalities,  or  of  the  collective 
organisation  of  industry  in  any  form,  is  that  of  the 
area  over  which  a  municipal  or  other  local  govern- 
ing authority  should  govern."  ^  '<  We  must  adapt 
local  government  to  the  industrial  necessities  of  the 
new  situation.  Our  problem  is  to  discover  and 
bring  to  life  the  governing  economic  unit."  ^     "  The 

1  "  Municipalisation  by  Provinces."     Fabian  Tract, 'No.  125. 
*  "Pulilic  Control  of  Electric  Power  and  Transit."     Fabian  Trad,  No. 
119,  p.  7- 

15 


Socialism  in  Local  Government 

bane  of  boundaries,"  as  it  is  termed,  is  to  be 
banished. 

"  The  solution  would  seem  to  lie  along  two 
parallel  lines  of  development.  First,  greatly  en- 
larged borough  boundaries  ;  second,  joint  Com- 
mittees or  boards  for  special  purposes.  In  regard 
to  the  first  point,  it  may  be  said  without  exaggeration 
that  there  is  not  an  administrative  area  that  does 
not  need  immediate  rectification.  If  this  be  so, 
why  is  it  not  done  ?  The  answer  is  twofold :  in 
the  first  place,  because  of  the  clumsy  and  ponderous 
parliamentary  process  necessary  ;  and,  in  the  second 
place,  because  of  local  difficulties,  partly  political 
but  mainly  difference  in  rating.  And  so  it  happens 
that  economic  developments  of  the  very  first  mag- 
nitude are  thwarted  or  diverted  because  of  local 
quarrels.  The  time  has  come  to  end  this  un- 
happy state  of  affairs.  These  disputes  are  generally 
fomented  by  interested  officials  ;  all  the  average 
ratepayer  wants  is  value  for  his  money,  and  it  is 
the  business  of  responsible  statesmanship  to  see 
that  he  gets  it.  We  therefore  propose  the  con- 
stitution of  a  permanent  Boundary  Commission, 
which  shall  be  charged  to  inquire  into  and  determine 
the  limits  of  all  local  areas,  municipal  or  otherwise. 
To  this  Commission  should  be  given  full  powers. 
It  should  be  composed  of  men  well  trained  in  the 
intricacies  of  local  administration,  so  that  their  deci- 
sions should  be  in  harmony  with  public  policy.  .  .  ." 

"  Let  us  now  try  to  visualise  these  proposed 
changes.  Our  large  municipalities  are  no  longer 
hemmed  in  by  semi-irresponsible  minor  authorities. 
Manchester,     Birmingham,     Liverpool,     Newcastle, 

i6 


The  New  Heptarchy 

London,  at  length  administer  the  affairs  of  the  popula- 
tions depending  upon  the  local  industries.  Out  of  a 
hopeless  welter  of  borough,  urban,  and  rural  and  parish 
councils,  emerges  a  large,  responsible,  and  unified 
governing  body  which  attracts  not  only  the  best 
representative  citizens,  but  also  the  most  capable 
engineering  and  administrative  experts.  '  Sister  am 
I  in  my  mother's  house  but  mistress  of  my  own,' 
might  almost  be  the  motto  of  these  new  bodies. 
Thus  equipped,  it  may  be  said  that  the  way  is  clear 
for  the  complete  control  of  electrical  power  and 
transit :  control  within  its  own  enlarged  area  ; 
control  over  a  vastly  greater  area  by  means  of 
joint  boards  or  other  co-operative  action.  Nor  need 
developments  end  here.  The  enormous  demand 
for  electrical  machinery,  for  rails,  for  fuel,  for  raw 
material,  suggests  the  early  possibility  of  collective 
production,  which  would  be  simplified  by  the  neces- 
sity imposed  upon  authorities  to  standardise  all  the 
materiel."      (Fabian  Trad,  No.  119,  pp.  12,  13.) 

This  novel  geographical  change,  by  which  the 
regional  unit  of  government  is  to  be  a  province,  is 
a  return  to  the  Saxon  Heptarchy.  Or,  to  use  a 
more  modern  term,  it  is  the  latest  development  of 
Home  Rule.  The  existing  sixty-two  administrative 
counties  are  to  be  formed  into  seven  or  more  pro- 
vinces, governed  by  boards,  composed  of  men 
"  elected  by  the  various  local  authorities  within  each 
new  area."  For  instance,  in  the  case  of  London, 
"  the  transit  and  electricity  board  would  be  elected  "  by 
the  five  County  Councils  of  London,  Essex,  Middle- 
sex, Surrey,  and  Kent,  "  with  the  addition  perhaps, 
of  representatives  from   urban  sanitary  authorities." 

17  B 


Socialism  in  Local  Government 

It  may  be  observed  that  already  an  agitation  has 
been  set  on  foot  by  the  Progressive-Sociahst  party 
in  London  Government  with  a  view  to  the  con- 
stitution of  a  Greater  London  by  the  extension 
of  the  present  county  boundary  until  it  comprises 
nearly  the  whole  of  the  five  Home  Counties.^ 

A  further  development  even  is  contemplated  "  in 
connection  with  local  government  and  the  collective 
control  of  industry."  From  the  Provincial  Boards 
would  be  elected  National  Boards,  whose  duties 
would  comprise  the  manufacture  of  rolling  stock  by 
direct  employment  in  national  workshops  "  for  the 
whole  of  the  publicly  owned  transit  service  of  the 
country  ; "  also  factories  are  contemplated  to  pro- 
duce tram  rails  and  motor  cars  ;  electric  plant, 
pumping  and  other  machinery,  &c.  &c.  Other 
subsidiary  "  activities "  of  a  like  character  are  to 
be  evolved,  which  will  "  lead  to  the  extension  of  the 
power  of  Society  over  its  own  economic  life."  In 
fact,  the  full  Socialist  State  is  to  be  thus  brought 
into  being. 

The  intemperate  magnificence  of  this  skeleton 
project  for  a  social  millennium  is  open  to  severe 
criticism  even  from  the  Socialist  side.  In  plain 
terms,  it  shows  that  the  Administrative  Socialist  has 
no  belief  in  Social-Democracy,  which  he  regards  as 
ignorant,  ill-disciplined,  and  likely  in  blind  faith  to 
destroy  Society  without  providing  an  alternative 
scheme.  For,  be  it  observed,  the  most  superficially 
striking  fact  about  this  plan  is  the  revival  of  the 
rejected  system  of  Indirect  Election.  The  Pro- 
vincial   Boards    are    to    be    indirectly    elected    from 

^  London  To-day  and  To-tnoi-row. 
l8 


The  New  Heptarchy 

local  authorities.  More  curious  still,  the  National 
Boards  are  also  to  be  indirectly  chosen  from  the 
Provincial  Boards.  So  that  the  electors,  in  voting 
for  a  member  of  a  small  county  borough,  or  an 
urban  district  council,  must  contemplate  the  possi- 
bility of  the  candidate  they  support  becoming,  firstly, 
a  member  of  an  important  provincial  body,  and, 
secondly,  occupying  the  still  more  onerous  office  of 
member  of  one  of  the  National  Boards.  Indirect 
Election,  so  objectionable  to  Social-Democracy  a 
few  years  ago,  because  it  leads  to  irresponsibility 
and  bad  government,  is  now  hailed  by  Fabian 
Socialists  as  "likely  to  give  satisfactory  results."  In 
other  words,  it  is  hoped  that  the  system  will  produce 
a  set  of  over-men,  a  kind  of  Socialist  aristocracy  of 
talent,  who  will  shepherd  the  herds  of  stereotyped 
mediocrities  constituting  the  Socialist  nation. 

This  retrograde  scheme  of  popular  choice  twice 
removed  is  not  the  eccentric  advocacy  of  one  in- 
dividual. It  is  a  considered  report  from  a  Fabian 
Committee,  adopted  by  the  Fabian  Society.  The 
whirligig  of  Time  does,  indeed,  bring  its  revenges  ; 
for  the  writers  of  the  Fabian  Essays  in  1889  de- 
clared their  belief  "  in  a  State  identified  with  the 
whole  people  by  cojtipkte  Democracy  "  and,  in  a  passage 
we  have  already  quoted,  affirmed  that  a  "  democratic 
state  cannot  become  a  >Socm/- Democratic  state,  un- 
less it  has  in  every  centre  of  population  a  local 
governing  body  as  thoroughly  democratic  in  its 
constitution  as  the  central  Parliament."  Now,  they 
abandon  the  idea  of  a  free  commonwealth  of  voters, 
and  embrace  the  belief  of  Carlyle,  that  "there  was 
no  nation  that  could  subsist  upon  Democracy." 

19 


Socialism  in  Local  Government 

This  resurrection  of  the  narrow  formahsm  of 
Indirect  Election  may  well  arouse  a  just  suspicion 
that  Administrative  Socialism  is,  indeed,  not  so 
much  a  sound  theory  of  political  science,  which 
its  authors  claim  it  to  be,  as  a  political  device  ;  not 
a  rational  system  of  truth,  but  an  inconsistent  bundle 
of  sophistries.  For  what  has  practical  experience 
of  Indirect  Election  taught  us  ?  First,  that  it  creates 
a  wide  gulf  between  the  elector  and  the  public 
representative.  Responsibility  is  the  essence  of 
constitutional  rule.  To  whom  is  the  indirectly 
elected  member  of  a  National  Board  to  be  respon- 
sible ?  The  ratepayers'  intelligent  interest  and  right 
of  interference  in  civic  affairs  are  rendered  impos- 
sible. Take  the  case  of  the  defunct  Metropolitan 
Board  of  Works.  The  system  under  which  that 
important  authority  was  elected  by  the  various  local 
bodies  from  their  own  members,  excited  no  interest 
among  Londoners.  Effective  criticism  was  lacking. 
At  election  times  the  ratepayer  was  chiefly  con- 
cerned with  the  merits  or  demerits  of  his  local 
Vestry,  and  not  with  the  larger  questions  of  policy 
appropriate  to  London's  Central  Authority.  Rarely, 
in  choosing  their  representatives  upon  the  local 
Vestry,  did  the  ratepayers  contemplate  that  one 
or  more  of  them  would  ultimately  form  a  unit  in 
a  far  more  important  body.  And  if  they  did,  how 
could  they  reconcile  the  conflicting  claims  thus 
brought  to  their  minds  ?  Indirect  Election  results, 
too,  in  a  low  personnel.  The  ambition  of  the  ablest 
men  will  not  stoop  to  election  to  a  minor  local 
body  on  the  chance  that,  by  two  subsequent  pro- 
cesses of   indirect   election,  they  may  reach  to   the 

20 


The  New  Heptarchy 

high  position  of  membership  of  a  National  Board. 
Their  ambition  is  not  so  tortuous.  Under  the 
present  system  of  local  administration,  the  less  able 
aspire  to  local  honours  ;  the  few  choice  spirits 
qualified  to  manage  provincial  or  national  concerns, 
if  tempted  at  all,  stand  for  direct  election  to  the 
major  but  not  to  the  minor  authority. 

One  further  great  weakness  of  the  Fabian  scheme 
is  that  it  presumably  contemplates  that  a  member 
of  a  National  Board  is  to  continue  to  discharge  his 
duties  as  a  member  of  a  Provincial  Board  and  of 
the  subsidiary  local  authority  to  which  he  was  first 
elected.  Surely  this  is  asking  too  much  from  any 
really  "  representative  citizen  "  ? 

Another  point  of  the  Fabian  plan  calls  for 
comment.  All  the  efforts  of  the  last  thirty  years 
towards  a  simplification  of  Local  Government  are 
to  be  thrown  to  the  winds.  Two  new  classes  of 
authorities  are  to  be  superimposed  upon  the  exist- 
ing complicated  order.  A  chaos  of  authorities,  a 
chaos  of  areas,  and  a  chaos  of  rates,  unequalled  in 
municipal  history,  will  be  the  consequence.  This 
attempt  to  mould  local  administration  to  suit  some 
passing  industrial  phase  is  merely  the  latest  example 
of  that  patchwork  expediency  which  is  the  curse 
of  sound  government,  and  which  we  are  so  apt  to 
mistake  for  well-ordered  evolution.  The  Provincial 
and  National  Boards  are  not  part  of  a  constructive 
scheme,  but  so  many  wedges  to  be  driven  into  the 
social  fabric  until  it  loosens  and  topples  over. 

We  do  not  wish,  at  the  moment,  to  enter  upon  a 
detailed  consideration  of  the  enormous  duties  which 
are  to  be  discharged  by  the  Provincial  and  National 

21 


Socialism  in  Local   Government 

Boards.  Nevertheless  it  is  essential  to  note  that 
sooner  or  later  they  are  to  assume  the  whole 
business  of  production  and  distribution  for  forty- 
five  millions  of  people,  who  are  to  expect  a  wise 
and  economical  management  from  men  who 
primarily  were  elected  to  discharge  the  sanitary 
duties  of  a  small  local  body.  "  The  whole  business 
would  be  public,  and  the  customer  would  be  one's 
indirect  master  through  the  polling  booth."  ^  This 
work,  moreover,  involves  the  marshalling,  disciplining, 
and  controlling  of  millions  of  labourers  ;  the  planning 
out  of  vastly  complicated  processes  of  manufac- 
ture, transfer,  and  apportionment.  It  is  clear  that 
national  or  even  provincial  organisation  on  this 
huge  scale  would  involve  such  a  rigid  regulation  of 
the  lives  of  men  as  would  make  existence,  at  the 
best,  like  the  life  of  a  lunatic  in  a  County  Asylum. 
The  necessary  subordination  of  man  under  the 
present  system  of  Society  is  nothing  compared  with 
the  absolute  slavery  involved  in  Administrative 
Socialism. 

"  Slaves  by  their  own  compulsion  !     In  mad  game, 
They  break  their  manacles,  to  wear  the  name 
Of  Freedom,  graven  on  a  heavier  chain." 

1  H.  G.  Wells,  Nezv  Worlds  for  Old. 


22 


Ill 


THE    HISTORY    OF    MUNICIPAL 
TRADING 

Until  a  few  years  ago  the  prevailing  impression 
concerning  Municipal  Trading  was  that  it  was  the 
product  of  modern  conditions  ;  that  it  derived  its 
principal  propelling  force  not  from  Socialism,  but 
from  the  business  motive  embodied  in  the  mercan- 
tile members  of  municipal  authorities.  It  would 
appear,  however,  that  this  view  is  only  partially 
true.  The  origin  of  Municipal  Trade  is  lost  in  the 
mists  of  antiquity,  and  in  its  latest  development  it 
is  not  based  upon  commercial  considerations.  It 
is  now,  as  we  have  seen  in  the  previous  chapters, 
one  important  side  of  a  vast  political  move.  "  Muni- 
cipal Trading,"  says  Mr.  G.  Bernard  Shaw,  "  seems 
a  very  simple  matter  of  business.  Yet  it  is  con- 
ceivable by  a  sensible  man  that  the  political  struggle 
over  it  may  come  nearer  to  a  civil  war  than  any 
issue  laised  in  England  since  the  Reform  Bill  of 
1832.  It  will  certainly  not  be  decided  by  argu- 
ment alone.  Private  property  will  not  yield  its 
most  fertile  provinces  to  the  logic  of  Socialism."  ^ 
Though    the    argumentative     skirmishes     fought     in 

^   T/ie  Covi)no7i  Sense  of  Rhmicipal  Trading,  G.  B.  Shaw. 

23 


Socialism  in  Local  Government 

recent  years  over  the  question  have  been  often 
severe,  no  one  really  contemplates  an  appeal  to 
force.  In  the  main,  there  has  been  a  general  in- 
difference to  the  insidious  manner  in  which  the 
numerous  changes  from  private  to  collective  action 
have  taken  place.  The  quiet  work  of  the  Adminis- 
trative Socialist  during  the  last  twenty  years  attracted 
little  or  no  public  attention.  Political  and  muni- 
cipal parties  were  slow  to  realise  the  steady  process 
by  which  the  citadel  of  Local  Government  was 
being  captured  for  the  propagation  of  Municipal 
Socialism.  And  this  stealthy  advance,  under  the 
guise  of  Progressivism,  had  gained  so  many  im- 
portant points  of  advantage,  that  Mr.  G.  B.  Shaw, 
in  1904,  thought  the  whole  position  of  Municipal 
Trading,  as  regards  commercial  success,  was  im- 
pregnable. "  It  is  waste  of  time  to  force  an  open 
door,"  which  "  has  been  carried  clean  off  its  hinges  by 
the  victorious  rush  of  municipal  Socialism,  under  the 
reassuring  name  of  Progressivism."  This  assurance, 
however,  was  clearly  premature,  because  the  conflict 
is  only  now  assuming  definite  shape,  and  beginning 
to  develop  tangible  features  as  the  unseen  phases  of 
Municipal  Trade  are  dragged  out  of  the  foggy  labyrinth 
of  local  administration  into  the  light  of  day. 

To  understand  the  significance  of  Municipal  Trade 
and  the  real  nature  of  the  forces  which  produced 
it,  we  must  glance  at  the  main  features  of  its  history. 
For  Municipal  Enterprise  was  not  born  in  a  single 
instant,  but  was  a  gradual  growth  and  development 
through  a  long  tract  of  time.  This  development 
may  be  divided  into  three  stages  : — the  Early,  the 
Middle,   and  the   Modern. 

24 


The  History  of  Municipal  Trading 

With  regard  to  the  first  stage,  without  venturing 
upon  any  lengthy  account  of  the  early  days  of 
English  Local  Government,  it  may  be  said  that 
certain  forms  of  municipal  activity,  which  exist 
now,  date  back  to  the  period  of  the  village  com- 
munity in  Great  Britain.  Markets,  for  instance, 
are  the  oldest  form  of  local  service  ;  at  first  requir- 
ing only  an  open  space  on  common  land  in  each 
village,  and  a  few  rough  hurdles  to  form  a  common 
mart.  Then,  as  commercial  economy  grew,  the 
market  accommodation  became  of  a  more  sub- 
stantial character,  buildings,  &c.,  being  provided, 
and  officials  appointed.  Tolls  and  dues  were  paid, 
and  formed  the  subjects  of  royal  grants  of  monopolies 
to  individuals  and  often  to  towns.  Between  the 
years  1200  and  1482  nearly  five  thousand  local 
centres  of  organised  trade  were  established  by  grants 
of  markets  and  fairs. 

"  At  first,  indeed,  municipal  life,  even  at  its  best, 
was  on  a  very  humble  scale.  The  biggest  Boroughs 
could  probably  in  1300  only  make  a  show  of  four 
or  five  thousand  inhabitants,  and  of  enfranchised 
burgesses  a  yet  smaller  number ;  while  the  mud 
or  wood-framed  huts  with  gabled  roofs  of  thatch 
and  reeds  that  lined  their  narrow  lanes  sheltered 
a  people  who,  accepting  a  common  poverty,  traded 
in  little  more  than  the  mere  necessaries  of  life."  ^ 
Other  primary  functions  of  ancient  Local  Govern- 
ment, of  which  vestiges  still  remain,  were  connected 
with  the  provision  of  piers  and  harbours,  and,  at 
a  later  date,  docks  and  water  supply.  It  is  curious 
to  note  that  the  supervision  of  the  supply  of  food 

^   Town  Life  in  the  Fifteenth  Cetitury,  Mrs.  J.  R.  Green,  p.  12. 

25 


Socialism  in  Local  Government 

was,  in  the  fifteenth  and  sixteenth  centuries,  a 
municipal  duty,  and  stringent  regulations  governed 
the  production  and  sale  of  food  stuffs.  With  the 
establishment  of  better  means  of  communication 
between  towns  and  villages,  and  the  extension  of 
trade,  food  supply  ceased  to  be  a  matter  of  local 
concern,  and  passed  altogether  into  the  hands  of 
private  enterprise. 

Now,  these  early  cases  of  communal  or  collective 
action  appear  to  have  been,  not  a  supersession  of 
existing  private  effort,  nor  even  competitive  trading, 
but  works  set  up  by  the  local  authority,  the  village 
assembly,  or  folk-moot,  the  manorial  courts  and 
the  townships,  as  the  march  of  politics  unfolded, 
and  when  mdividualj  energy  was  not  forthcoming  to 
provide  for  the  essential  needs  of  the  community. 

During  the  progress  of  commerce  in  the  Middle 
Ages,  the  relations  between  local  administration  and 
the  merchant  and  craft  guilds,  though  curiously 
interwoven,  do  not  appear  to  have  gone  beyond  the 
regulation  and  control  of  industry.  The  active  and 
rigorous  municipal  control  of  trades,  useful  in  some 
respects,  was  provocative  of  discontent,  for  we  are 
told  that  "  at  times  the  manufacturer  had  his  griev- 
ances against  the  municipal  authorities,  whenever 
he  found  himself  worried  and  fettered  by  the  tradi- 
tional wisdom  of  Town  Councils,  who,  for  a  variety 
of  reasons  of  their  own,  wanted  to  keep  the  ultimate 
control  over  his  trade  so  as  to  draw  a  profit  for  the 
town."  ^  As  time  passed  the  democratic  town  govern- 
ment grew  into  an  oligarchic  plan  of  administration, 
directed  from  the  political  centre,  the  capital. 

1  Town  Life  in  the  Fifteenth  Century,  p.  70. 
26 


The   History   of  Municipal  Trading 

With  the  decline  of  the  mediaeval  industrial  system, 
and  the  rise  of  the  Industrial  Revolution,  the  second 
or  middle  stage  of  Municipal  Trade  began.  Local 
Government,  especially  in  the  large  towns,  was  at 
first  almost  wholly  divorced  from  trading.  At  the 
beginning  of  the  seventeenth  century  we  find  many 
Manorial  Courts  and  Municipal  Corporations  owning 
slaughter-houses,  markets,  docks,  quays,  and  piers  ; 
but  from  then  until  1835  Local  Government  seems 
to  have  undergone  a  process  of  general  decay.  The 
form  was  there,  but  not  the  life.  Municipal  enter- 
prise was  at  a  standstill.  Private  enterprise  far  out- 
stripped collective  effort  in  the  scale  of  its  operations. 
The  system  of  unregulated  competition,  with  its 
enormous  expansion  of  commerce,  changed  England 
from  an  agricultural  to  a  manufacturing  country. 
The  cult  of  pure  Individualism  was  rampant.  The 
prevailing  economic  belief  was  that  the  State  or 
the  municipality  ought  not  to  trade,  nor  even  to 
legislate  for  trade,  but  to  devote  its  powers  to  such 
matters  as  were  deemed  to  be  wholly  outside  the 
domain  of  private  activity.  This  tendency  is  seen 
in  the  fact  that  in  the  first  part  of  the  last  century 
it  was  not  lawful  for  a  municipahty  to  make  a 
profit  by  trade.  How  far  the  municipal  influence 
had  declined  may  be  gauged  by  the  statement  of 
the  Royal  Commissioners  upon  Municipal  Corpora- 
tions in  1835,  ^^'Iio>  when  they  came  to  inquire 
into  the  condition  of  the  English  boroughs,  found 
that  the  old  "free  and  vigorous  life  was  utterly 
blotted  out." 

The  Municipal  Corporations  Act  of  1835  estab- 
lished  the   right   of   every  person,  "  notwithstanding 

27 


Socialism  in  Local  Government 

any  custom  or  bye-law,"  to  "  keep  any  shop  for  the 
sale  of  all  lawful  wares  and  merchandise  by  whole- 
sale or  retail."  The  whole  spirit  of  legislation  was 
towards  freedom  of  industry.  Little  advance  in 
Municipal  Trade  was  made  until  about  1850.  Then 
began  a  movement  by  some  towns  to  purchase  their 
markets  from  private  owners.  The  Baths  and  Wash- 
houses  Act  of  1846  gave  the  opportunity  for  the 
erection  of  municipal  baths  and  laundries.  Water 
supply,  harbours  and  docks,  piers,  ferries,  and  quays, 
too,  began  slowly  to  come  under  the  control  and 
management  of  semi-official  and  municipal  bodies. 
In  the  case  of  gas  concerns  there  were  only  eight 
municipal  undertakings  in  1850. 

The  transfer  of  large  communal  services  from 
private  to  municipal  ownership  was,  therefore,  not  at 
all  rapid.  The  few  changes  made  seem  to  have 
proceeded  not  from  any  general  unity  of  purpose,  or 
as  part  of  the  aims  of  party  politicians,  but  were, 
in  almost  every  case,  accidental.  The  object  was  to 
fill  the  few  gaps  left  by  private  enterprise.  Each 
case  was  considered  upon  its  merits  as  a  business 
proposition,  and,  on  the  whole,  public  opinion  and 
political  thought  was  opposed  to  the  practice. 

As  the  century  wore  on,  this  unconscious  Socialism 
was  gradually  extended  and  amplified  into  larger 
applications.  While  the  popular  belief  was  that  "  the 
great  majority  of  things  are  worse  done  by  the 
intervention  of  government  than  the  individuals 
most  interested  in  the  matter  would  do  them,"  and 
that  **  the  inferiority  of  government  agency,  for 
example,  in  any  of  the  common  operations  of  in- 
dustry or  commerce  is  proved  by  the  fact  that  it  is 

28 


The  History  of  Municipal  Trading 

hardly  ever  able  to  maintain  itself  in  equal  competi- 
tion with  individual  agency,  where  the  individuals 
possess  the  requisite  degree  of  industrial  enterprise, 
and  can  command  the  necessary  assemblage  of 
means,"  ^  there  was,  nevertheless,  a  considerable 
extension  of  municipal  activity.  This  was  the  result, 
partly  of  a  reflex  action  from  the  selfishness  of 
unrestrained  individualism,  and  also,  in  a  measure, 
of  the  formation  of  a  body  of  opinion  in  some 
municipalities  which  held  that  great  commercial 
monopolies  like  water  and  gas,  might  be  run  by  the 
municipality,  and  the  profits  secured  for  the  benefit 
of  the  ratepayers.  This  enticing  vision  of  profits  was 
a  particularly  convincing  argument  to  the  mercantile 
minds  of  the  Councillors.  But  in  no  sense  was  the 
movement  inspired  by  any  desire  to  bring  about  the 
establishment  of  Socialism.  In  fact,  the  able  business 
men  on  the  governing  bodies  of  the  great  towns 
would  have  strenuously  repudiated  any  such  descrip- 
tion of  their  attitude.  Water,  gas,  and  a  few  other 
kindred  concerns  were,  in  their  opinion,  legitimate 
objects  of  municipal  ownership  and  management 
under  certain  conditions.  There  the  business  traders 
hoped  to  stop.  But  the  Administrative  Socialists 
made  them  aware  that  these  exceptions  were  to 
become  the  general  rule  ;  that  they  marked  not  an 
end,  but  an  ineffectual  means,  requiring  further 
extension  and  collateral  aids.  These,  and  the  long 
list  of  enterprises  to  which  the  principle  of  municipal 
trading  was  to  be  applied,  were  thus  presented  to  the 
gaze  of  the  commercial  Councillor  like  the  never- 
ending  line  of  Banquo. 

^  Mill's  Principles  of  Political  Economy,  p.  571. 

29 


Socialism  in  Local   Government 

History  repeated  itself.  The  third  stage  of  Muni- 
cipal Trading  began.  The  town  once  more  became 
the  object  of  national  interest,  and  the  giant  labora- 
tory where  the  first  experiments  in  new  political 
theories  were  to  be  made.  As  the  immense  signifi- 
cance of  municipal  ownership  and  management  of 
commercial  concerns  dawned  upon  their  minds,  men, 
who  in  the  past  were  firm  advocates  of  municipalisa- 
tion,  became  sturdy  opponents  of  its  further  exten- 
sion. Nevertheless  the  march  of  the  Administrative 
Socialist  continued,  gaining  valuable  ground  here, 
losing  a  little  elsewhere,  but  on  the  whole  making  an 
immense  advance. 

The  growth  of  the  modern  desire  for  municipal 
control  or  management  found  expression  in  certain 
Acts  of  Parliament  allowing  local  authorities  to 
establish  gas  works,  and  to  supply  gas,  but  not  in 
competition  with  private  companies  ;  in  the  limited 
concessions  to  electric  and  tramway  companies, 
which  contained  provisions  giving  a  right  of  pur- 
chase by  the  local  authority  after  a  certain  period  ; 
and  in  the  Housing  of  the  Working  Classes  Act, 
1890.  With  the  effects  of  this  legislation  we  shall 
deal  in  a  later  chapter. 

It  would  seem,  then,  that  so  far  as  the  early  and 
middle  stages  are  concerned,  there  can  be  little 
doubt  as  to  the  nature  and  tendency  of  the  progress 
of  Municipal  Trade.  Apart  from  the  intervention  of 
the  Socialist,  which  forms  the  third  stage  in  the 
history  of  Municipal  Trading,  it  is  possible  that  the 
unlimited  powers  of  private  monopoly  in  large 
public  services  would  ultimately  have  been  sub- 
jected to  a  well-defined  and  wise  policy  of  municipal 

30 


The  History  of  Municipal  Trading 

control  and  regulation.  Unfortunately,  that  solu- 
tion of  the  difficulty  received  no  serious  considera- 
tion from  Parliament.  Certainly  no  real  effort 
seems  to  have  been  made  in  the  period  between 
1 87 1  (when  the  Local  Government  Board  was 
established)  and  1890  to  arrive  at  that  happy 
medium.  It  is  useless,  perhaps,  to  indulge  in  vain 
regrets  ;  but  had  the  Central  State  Department  even 
thirty  years  ago  devised  model  franchises,  securing 
a  good  service,  a  share  of  profits  for  the  ratepayers, 
maximum  prices,  and  regulations  as  to  conditions 
of  employment,  it  is  clear  that  an  admirable  system 
of  municipal  control  of  private  monopolies  would 
have  been  set  up,  and  the  way  to  Administrative 
Socialism  insurmountably  barred.  As  it  is,  this 
want  of  foresight  left  the  door  open  to  the  enemy. 
It  has  brought  us  face  to  face  with  the  gravest  issue 
in  contemporary  politics.  In  the  sphere  of  Local 
Government  the  vital  issue  for  decision  now  is 
whether  "  the  personal  rivalry  and  competition  of 
life,  which  not  only  is  now  but  has  been  from  the 
beginning  of  life,  the  fundamental  impetus  behind 
all  progress,"  is  to  be  suspended,  as  the  Socialists 
desire  ;  or  whether  the  process  of  social  develop- 
ment shall  be,  as  it  has  been  from  all  time,  "  to 
raise  this  rivalry  to  the  very  highest  degree  of 
efficiency  as  a  condition  of  progress,  by  bringing 
all  the  people  into  it  on  a  footing  of  equality  (equal 
opportunity),  and  by  allowing  the  freest  possible 
play  of  forces  within  the  community,  and  the  widest 
possible  opportunities  for  the  development  of  every 
individual's  faculties  and  personality." 


31 


IV 


THE    EXTENT    OF    MUNICIPAL 
TRADING 


Turning  to  the  meagre  and  incomplete  information 
furnished  by  Parliamentary  and  other  returns,  we 
can  gauge  the  rapid  progress  and  extent  of  Municipal 
Trade  from  the  outstanding  loans  of  local  autho- 
rities.^ Split  up  into  two  heads — (i)  "  Unproductive 
Debt  "  (capital  expended  upon  ordinary  services),  and 
(2)  "  Reproductive  Debt  "  (capital  spent  upon  Munici- 
pal Undertakings  of  a  trading  nature) — the  figures 
are  as  follows  : — 


1902-3, 

1904-5- 

Unproductive  Debt    . 
Reproductive  Debt     . 

Millions  £ 
I95i 
175J 

Millions  £ 
219I 
246I 

370/2 

466! 

Note  how  in  the  short  space  of  two  years  the 
Reproductive  Debt  has  overtaken  and  passed  the 
Unproductive   Debt. 

Practically  no  detailed  information  is  forthcoming 
in  any  Annual    Report    as  to   the   number  of   local 

^  Local  Governmeni  Board  Annual  Report,  1906-7,  p.  469. 

32 


The  Extent  of  Municipal  Trading 

authorities  engaged  in  trading,  the  character  of  their 
works,  and  the  financial  results.  The  fullest  return 
is  that  entitled  "  Municipal  Corporations "  (Repro- 
ductive Undertakings),  No.  398,  issued  in  December 
1902,  which  gives  average  figures  over  four  years. 
It  appears  that  the  number  of  Municipal  Corpora- 
tions in  England  and  Wales  carrying  on  one  or  more 
"Reproductive  Undertakings"on  the  31st  March  1902 
was  299  out  of  a  total  number  of  317.  How  many 
other  local  authorities,  not  classed  as  "  Municipal 
Corporations,"  were  possessed  of  trading  concerns  ? 
Observe, too,  that  London  is  excluded  from  the  Return. 
As  to  the  character  of  the  undertakings  and  the 
number  of  authorities  engaged  in  them,  the  incom- 
pleteness of  the  Return  is  evident  from  the  following 
table.  The  first  column  states  the  number  of  under- 
takings carried  on  by  the  Municipal  Corporations 
in  England  and  Wales  (1902  Return);  the  second 
column  gives  the  estimated  number  of  undertakings 
by  different  local  bodies  in  the  United  Kingdom  a 
few  years  later.     The  last  column  is  not  complete : — 


Waterworks 

Gasworks    ...... 

Electricity  Supply 

Tramways — 

{a)  Owned  and  worked  by  Corporations 
(fi)  Owned,  but  worked  by  Companies 

Markets,  &c. 

Baths  and  Wash-houses 

Burial  Grounds  . 

Working-Class  Dwellings 

Harbours,  l^iers,  &;c.  . 

Other  undertakings     . 

3^ 


I 

2 

193 

1 140 

97 

270 

102 

... 

29  I 

16; 

179 

228 
138 

450 
260 

143 

450 

24 

43 
16 

100 

Socialism  in  Local  Government 

Taking  the  principal  reproductive  undertakings, 
viz.,  waterworks,  gasworks,  electric  lighting,  tram- 
ways and  light  railways,  and  markets,  the  number  of 
local  authorities  engaged  in  municipal  trading  in  1903 
was  as  follows : — 

9  County  Councils  out  of.        .  .62 

293  Town  Councils  out  of    .         .  .     319 

529  Urban  District  Councils  out  of  .     812 

466  Rural  District  Councils  out  of  .     672 

Together  with  other  miscellaneous  bodies,  there 
were  altogether  some  1339  authorities  engaged  in 
trading  enterprises.  This  figure  does  not  include 
81  public  bodies  whose  functions  are  limited  to 
trading  purposes,  viz.,  55  pier,  quay,  and  harbour 
authorities,  21  water  authorities,  and  5  bodies  con- 
cerned with  gas,  tramways,  and  electricity,^ 

It  may  be  added  that  other  items  of  municipal 
activity  actually  worked  are  telephone  services, 
golf  links,  manufacture  of  paving-stones,  electric 
fittings,  milk  depots,  steamboats,  motor  'buses,  bath- 
ing machines,  fire  and  accident  insurance,  concert- 
rooms,  and  carriage  of  goods.  Other  industries 
deemed  to  be  ripe  for  transfer  to  municipal  owner- 
ship and  management  are  coal,  milk,  bread,  and  the 
supply  of  intoxicating  liquors.  The  chief  under- 
takings will  be  dealt  with  in  a  later  chapter.  We 
may,  however,  with  advantage  here  refer  to  some  of 
the  minor  matters. 

Coal  Supply. — With  regard  to  coal  it  is  interesting 
to  note  that  Bradford  passed  a  resolution  in  favour 
of  applying  to  Parliament  for  power  to  borrow 
money   to    purchase    a    coal    mine,    but    afterwards 

1  Report  on  Accounts  of  Local  Authorities,  vol.  2,  "Evidence." 

34 


The  Extent  of  Municipal  Trading 

rescinded  the  motion.  Similar  proposals  have  been 
placed  before  the  London  County  Council,  the  City 
of  Glasgow,  and  the  Manchester  Corporation,  but 
have  failed  to  secure  general  approval. 

Milk  Depots. — Several  local  authorities  have  estab- 
lished milk  depots  for  the  supply  of  sterilised  milk 
for  children.  On  the  whole  these  depots  have  been 
very  poorly  patronised,  and  are  nearly  all  run  at  a  loss. 
Mr.  John  Burns  (President  of  the  Local  Government 
Board)  presented  the  following  table  to  the  House 
of  Commons  in  May,  1907: — 


Year  ended 

Cost  of 

March,  ex- 

Expendi- 

Name of  Borough. 

Installa- 

cept where 

Receipts. 

tion. 

otherwise 
stated. 

ture. 

£ 

£ 

£ 

Battersea ' 

659 

1903 

736 

1 1 24 

1904 

1536 

2113 

1905 

1204 

1779 

1906 

879 

1381 

1907 

796 

1259 

Lambeth  ^ 

881 

1905 

... 

41 

1906 

16 

170 

1907 

286 

480 

Woolwich  ^     . 

663 

1907 

189 

498 

Bradford  *       . 

444 

1904 

659 

803 

1905 

1383 

1453 

1906 

1555 

1690 

1907 

1974 

1868 

*  The  figures  for  1907  are  estimated. 

*  Depot  opened  in  February,  1906. 


Column  2  shows  cost  of  adapting 
The  particulars  relate  to  the  half- 


premises  and  of  fittings  and  utensils. 

^  Depot  opened  in  November,  1906. 
year  ended  i8th  May,  1907.     Column  2  shows  cost  of  adapting  premises, 
of  furniture,  fittings,  apparatus,  and  milk-delivery  plant. 

*  Column  2  shows  cost  of  machinery,  fixtures,  and  fittings. 

35 


Socialism  in  Local  Government 


Year  ended 

Name  of  Borough. 

Cost  of 

Installa- 
tion. 

March,  ex- 
cept where 
otherwise 
stated. 

Receipts. 

Expendi- 
ture. 

£ 

£ 

£ 

Burnley  ^ 

390 

1906 

458 

733 

1907 

425 

640 

Liverpool  ^ 

•  •  • 

1901 

518 

2000 

1902 

1535 

4335 

1903 

2231 

4259 

1904 

1676 

3634 

1905 

1644 

3632 

1906 

1250 

3206 

St.  Helens  =^    . 

391 

1900 

187 

265 

1901 

328 

471 

1902 

246 

403 

1903 

209 

440 

1904 

140 

326 

1905 

123 

300 

1906 

87 

272 

1907 

78 

256 

Ashton-under-Lyne 

444 

1902 

266 

353 

1903 

314 

449 

1904 

350 

479 

1905 

431 

547 

1906 

414 

603 

1907 

449 

559 

Dukinfield*    . 

220 

1901-3 

124 

351 

1 


^  Depot  opened  in  1905.  The  particulars  relate  to  the  two  years  ended 
March,  1906  and  1907. 

^  The  cost  of  installation  not  distinguished.  Expenditure  on  furni- 
ture and  fittings,  machinery,  repairs,  and  alterations  to  buildings,  &c., 
is  included  in  column  5.  The  particulars  relate  to  the  years  ended 
31st  December. 

*  The  figures  as  to  1900  are  for  eight  months  only. 

*  Depot  closed  after  two  years.  Column  5  shows  the  cost  on  the 
rates. 

36 


The  Extent  of  Municipal  Trading 

Municipal  Telephones. — After  considerable  opposition 
from  the  General  Post  Office  and  the  local  authorities 
over  a  long  series  of  years,  the  National  Telephone 
Company  found  itself  threatened  in  1898  with  the 
competition  of  municipal  corporations.  The  Select 
Committee  of  1898  recommended  "general,  imme- 
diate, and  effective  competition  by  either  the  Post 
Office  or  the  local  authority."  In  the  following  year, 
the  House  of  Commons  passed  a  Bill  conferring 
powers  upon  some  1300  local  authorities  to  raise  or 
apply  money  for  telephonic  purposes.  Nevertheless, 
only  thirteen  applied  for  licences,  and  six  established 
telephone  exchanges.  The  result  was  a  disastrous 
failure.  Glasgow,  Tunbridge  Wells,  Brighton,  and 
Swansea  have  sold  their  undertakings,  either  to  the 
National  Telephone  Company,  or  to  the  Post  Office. 
As  might  have  been  expected,  the  municipal  areas 
were  totally  inadequate  to  provide  for  an  efficient 
and  cheap  service.  The  experiment  was,  indeed,  a 
sorry  example  of  mischievous  municipal  trading,  and 
a  fitting  conclusion  to  an  era  of  unfair  hampering 
and  crippling  of  private  enterprise. 

As  an  illustration  of  the  cost  to  the  ratepayers,  it 
may  be  stated  that  Glasgow,  in  September  1906,  sold 
its  undertaking  to  the  Post  Office  at  a  loss  of  about 
^1200  ;  and  that  the  Post  Office  Authorities  shortly 
afterwards  stated  that  the  chief  exchanges  would 
have  to  be  reconstructed,  and  the  telephones  of  the 
subscribers,  who  numbered  nearly  1300,  would  have 
to  be  replaced. 

At  the  present  time  only  three  municipal  telephone 
systems  are  working. 

Motor  'Buses. — Some  local  authorities   have   tried 

37 

20818 


Socialism  in  Local  Government 

experimental  services ;  others  have  estabHshed  systems 
of  motor  omnibuses.  In  1906  the  Todmorden  Cor- 
poration obtained  Parliamentary  powers  to  establish 
a  service.  In  1907  the  omnibuses  began  to  run,  but 
it  is  stated  that  a  loss  has  been  incurred.  Bolton 
abandoned  its  motor  'bus  service  after  losing  ;^300  a 
year.  Glasgow  and  Leeds  possess  power  to  run 
motor  services.  Several  local  authorities  have  post- 
poned any  extension  of  their  tramway  systems  until 
it  is  seen  whether  the  new  means  of  locomotion  will 
succeed  or  fail. 

Municipal  Carriers. — In  1906  the  Manchester  Cor- 
poration proposed  to  establish  a  "  Manchester  Cor- 
poration Tramways  Parcels  Express,"  in  order  to 
carry  on  the  business  of  general  carriers.  The 
experiment  failed,  and  was  abandoned,  some  thou- 
sands of  pounds  being  lost. 

Municipal  Pawnshops. — At  various  times  proposals 
have  been  made  to  establish  municipal  pawnshops, 
but  no  definite  step  has  yet  been  taken  to  obtain 
Parliamentary  powers.  Many  provincial  towns  in 
France,  Germany,  and  Belgium  manage  such  institu- 
tions. The  excellent  Governmental  regulations  ap- 
plied to  the  management  of  pawnshops  by  private 
enterprise  in  the  United  Kingdom  afford  no  valid 
argument  to  municipal  traders  for  their  transfer  to 
municipal  ownership. 

Steamboats. — Apart  from  the  Clyde  Trust,  a  semi- 
municipal  steamboat  service  which  is  steadily  losing 
ground,  the  London  County  Council  Thames  steam- 
boat service  is  the  only  example  of  a  municipality 
embarking  upon  river  transit  of  this  kind.  The  result 
of  three  years'  working  was  a  loss  of  some  ;^  130,000 

38 


The  Extent  of  Municipal  Trading 

to  the  ratepayers.  Consequently  in  1908  it  was 
definitely  closed  down.  It  is  expected  that  the  sale 
of  the  boats,  &c.,  will,  produce  a  sum  far  less  than  the 
capital  invested. 

Taking  a  wide  survey  of  the  extent  of  municipal 
trading,  one  is  struck  by  the  growing  tendency  of 
local  bodies  to  dabble  in  new  ventures.  It  is  not 
merely  an  increase  in  the  municipal  appropriation  of 
old  and  well-tried  public  services  bearing  a  monopoly 
character  that  is  presented  to  our  view,  but  a  multi- 
plication of  the  various  kinds  of  duties.  Apart  from 
actual  performance  in  this  respect,  as  we  have  seen, 
the  Administrative  Socialist  threatens  to  bring  about 
in  the  near  future  a  further  prodigious  transfer  of 
industrial  concerns  from  private  to  municipal  owner- 
ship and  management.  It  behoves  us,  therefore,  to 
examine  the  results  of  Municipal  Trading,  in  so  far 
as  they  are  ascertainable  ;  to  consider  their  general 
effect  ;  and  to  endeavour  to  ascertain  whether  or  not 
it  is  in  the  best  interests  of  the  country  that  Socialistic 
speculations  should  be  realised  into  public  measures. 


39 


THE  OPPOSITION  TO  INQUIRY 

The  unusual  and  exceptional  nature  of  the  crisis 
through  which  civic  life  is  passing  at  the  present 
time  demands  the  fullest  information  from  the  Local 
Government  Board  and  from  local  bodies  as  to  the 
extent  and  financial  aspects  of  municipal  trading. 
There  can  be  little  doubt  as  to  the  nature  and  the 
tendency  of  the  development  so  far.  But  when  we 
come  to  inquire  into  the  extent,  the  true  financial 
and  economic  results  of  it,  we  are  met  at  the  outset 
by  a  paucity  of  material.  It  is  true  that  we  can 
glean  fragmentary  facts  from  limited  Parliamentary 
papers  upon  the  subject,  and  from  fitful  Returns 
covering  short  periods,  and  comprising  only  a 
portion  of  municipal  operations.  Nevertheless,  the 
broad  fact  remains  that  seldom  has  controversy 
upon  so  vital  a  subject  been  waged  with  so  little 
ascertained  knowledge  of  actual  conditions. 

Practically  the  last  ten  years  have  been  spent  by 
opponents  of  municipal  trading  in  efforts  to  secure 
adequate  public  inquiry,  to  which  inquiry  municipal 
traders  have  so  far  offered  a  desperate  and  successful 
resistance.  After  some  discussion.  Parliament  in 
May,  1900,  appointed  a   Joint   Select  Committee  of 

40 


The  Opposition   to   Inquiry 

the  two  Houses  "to  consider  and  report  as  to  the 
principles  which  should  govern  powers  given  by 
Bills  and  Provisional  Orders  to  municipal  and  other 
local  authorities  for  industrial  enterprises  within  or 
without  the  area  of  their  jurisdiction."  This  Select 
Committee  was  a  powerful  one.  The  representatives 
of  the  House  of  Lords  were  Lord  Crewe,  Lord 
Rothschild,  Lord  Peel,  Lord  Hampden,  and  Lord 
Windsor.  The  House  of  Commons  nominated  Mr. 
Grant  Lawson,  Mr.  Hobhouse,  Sir  Samuel  Hoare, 
Sir  Walter  Foster,  and  Sir  Leonard  Lyell.  After 
meeting  upon  sixteen  occasions,  and  hearing  the 
evidence  of  a  large  number  of  witnesses,  most  of 
them  advocates  of  municipal  trading,  the  Joint  Com- 
mittee reported  at  the  end  of  July,  two  months  after 
their  appointment,  that  they  "  are  of  opinion  that, 
having  been  appointed  at  a  comparatively  late  period 
in  the  Session,  it  is  not  possible  to  bring  their  inquiry 
to  a  satisfactory  conclusion  during  the  present  Session. 
They,  therefore,  recommend  that  they  should  be  re- 
appointed during  the  next  Session  of  Parliament,  and 
have  agreed  to  report  the  Minutes  of  Evidence  taken 
before  them,  with  an  appendix."  The  bulky  volume 
of  evidence,  while  throwing  some  light  upon  several 
interesting  phases  of  the  question  at  issue,  was  clear 
proof  of  need  for  further  investigation. 

Though  no  one  could  pretend  that  final  con- 
clusions could  be  drawn  from  the  information  at 
hand,  the  Government  unfortunately  ignored  the 
recommendation  of  its  own  Committee.  Why,  has 
never  been  made  clear.  Possibly,  the  pressure  of 
other  legislative  work,  the  war  in  South  Africa,  and 
the    formidable    opposition    to    any   further    inquiry 

41 


Socialism  in  Local  Government 

which  was  offered  by  the  municipal  trading  party, 
were  prevaiHng  reasons. 

However,  in  1902,  came  a  powerful  indictment  in 
the  Press  against  the  growth  of  municipal  enterprise. 
The  question  which  had  been  dormant  for  two  years 
once  more  became  a  burning  one.  Insistent  demands 
came  from  influential  sections  of  the  community  for 
the  reappointment  of  the  Joint  Committee  upon 
Municipal  Trading,  or  the  constitution  of  a  Royal 
Commission  thereon.  As  a  consequence,  Parlia- 
ment, in  the  middle  of  1903,  again  appointed  the 
Joint  Select  Committee,  though  considerable  resist- 
ance was  shown  to  the  proposal  when  it  came  before 
the  House  of  Commons.  Mr.  Broadhurst,  Labour 
M.P.  for  Leicester,  stated  "  I  oppose  it  now  on  the 
ground  that  its  effect,  and  what  I  fear  is  its  object,  is 
to  harass,  discredit,  annoy,  and  obstruct  corporation 
work.  I  have  confidence  in  trading  by  munici- 
palities." Mr.  John  Burns,  M.P.,  also  opposed  the 
motion.  He  said,  "All  the  Reports  issued  proved 
that  they  (the  municipalities)  did  their  work  wonder- 
fully well,  and  so  profitably  and  so  popularly  that  he 
thought  an  inquiry  was  absolutely  unnecessary  and 
would  be  a  work  of  supererogation."  ^  A  statement 
for  which  there  was  no  foundation  whatever. 

The  Select  Committee  thus  appointed  to  resume 
the  work  after  two  years'  suspension  had  again  only 
two  months  to  devote  to  investigation,  and  accord- 
ingly they  confined  their  inquiry  to  the  system  of 
municipal  book-keeping  and  audit.  Their  Report 
upon  this  point  was  conclusive  proof  of  the  in- 
adequacy  of   municipal    accounts,    and    they   made 

1  Hansard,  1903,  p.  982. 
42 


The   Opposition   to   Inquiry 

important  recommendations  with  a  view  to  secure 
reform.  A  suggestion  that  it  was  advisable  to 
continue  investigation  into  other  branches  of  the 
subject  of  municipal  trading  was  ignored  by  Parlia- 
ment. If  their  recommendations  had  become  law,  a 
proper  and  adequate  audit  of  the  accounts  of  local 
authorities  would  have  been  secured,  and  the  public 
would  have  been  able  to  ascertain  the  real  results  of 
municipal  trading  concerns. 

Nevertheless,  in  spite  of  serious  agitation,  nothing 
was  done  by  Parliament  to  give  effect  to  the  Report. 
A  Departmental  Committee  was  promised,  but  was 
never  appointed.  In  January,  1906,  Mr.  John 
Burns,  as  President  of  the  Local  Government  Board, 
appointed  a  Departmental  Committee  to  inquire  into 
the  system  of  accounts  kept  by  local  authorities. 
Their  Report  (Cd.  3614,  of  1907)  stated  that  "uni- 
formity has  not  been  obtained.  Further,  neither  the 
Returns  nor  the  Financial  Statements  profess,  nor 
are  they  able,  to  show  the  true  financial  position  of 
the  various  authorities  "  (par.  24).  And  in  that  pithy 
statement  is  a  full  answer  to  the  assertion  of  Mr. 
Burns  in  the  House  of  Commons  in  1903,  that  there 
was  no  need  for  inquiry. 

It  may  be  added,  that  all  attempts  to  secure  the 
appointment  of  a  Royal  Commission  to  make  a  full 
and  complete  analysis  of  the  whole  question  have  so 
far  failed. 

What  conclusion  is  to  be  drawn  from  the  strenuous 
and  sustained  resistance  to  investigation  ?  Any  one 
who  approaches  the  matter  with  an  impartial  mind 
cannot  fail  to  be  deeply  impressed  by  it.  He  must 
conclude  that  municipal  traders  shun  an  examination 

43 


Socialism  in  Local  Government 

of  their  position  ;  he  may  be  justly  suspicious  that 
such  information  as  is  available  to  the  public  is  the 
most  presentable  case  ;  and  that  unsunned  treasures 
of  fact  remain  to  be  revealed  which  are  not  favour- 
able to  the  contention  that  Municipal  Trade  is  an 
undoubted  success  from  all  points  of  view. 


44 


VI 

THE    FINANCIAL   ASPECT 

The  most  popular,  but  by  no  means  the  most  im- 
portant argument  advanced  in  favour  of  municipal 
trading,  is  that  it  does,  or  will,  produce  profits  in 
relief  of  rates.  This  appeal  to  the  pocket  was  the 
primary  reasoning  of  municipal  traders  thirty  or  forty 
years  ago.  It  was  an  attractive  one  to  ratepayers 
labouring  under  an  unpleasant  load  of  local  taxation, 
and  it  obscured  other  and  more  vital  considerations. 
The  Administrative  Socialist  also  uses  the  bait  of 
profits,  though  in  the  inner  circles  of  Socialism  it 
is  argued  that  no  profits  ought  to  be  made. 

"  Generally  speaking,  the  reduction  of  rates  is 
of  no  benefit  whatever  to  the  working  class.  Rates 
are  levied  upon  property,  and  to  devote  the  proceeds 
of  municipal  undertakings  to  the  reduction  of  rates 
is  simply  to  use  them,  as  we  have  already  stated,  as 
means  for  making  profit  for  the  propertied  class."  .  .  . 
"  The  primary  object  should  be  the  most  economical 
provision  of  the  best  possible  public  services."  ^ 

It  is  desirable  at  the  outset  to  state  that  to  ascertain 
whether  profits  are  or  are  not  made  by  municipalities, 
is  far  from  being  a  simple  task.  In  the  present  state 
of  affairs  it  appears  to  be  an  insoluble  puzzle. 

1  A  New  Catechism  of  Socialism,  Bax  and  Quelch,  pp.  38-39. 

45 


Socialism  in  Local  Government 

In  the  first  place — What  is  profit  ?  There  is  a 
difference  of  opinion  ;  one  side  claiming  "  gross 
profit,"  the  other  side  arguing  that  the  "  net  profit " 
alone  is  the  fact  to  be  considered.  Viewed  from  the 
financial  point  of  view,  the  position  of  a  municipal 
undertaking  is  this.  A  town  trading  in  electric 
light,  after  defraying  the  cost  of  production,  is  left 
with  a  surplus.  That  is  the  gross  profit,  and  it  is  equal 
to  the  sum  available  for  the  annual  dividend  usually 
paid  to  the  shareholders  of  a  company,  "  provided 
that  the  company  has  no  interest  on  debts  or  de- 
bentures to  provide  for,"  ^  and  has  made  provision 
for  depreciation.  Therefore  "  gross  profit  "  does  not 
prove  the  financial  success  of  municipal  trading  ; 
for  out  of  the  gross  profit  must  be  proyided  the 
interest  on  the  debt  of  the  undertaking,  the  annual 
sum  to  be  set  aside  in  a  sinking  fund  for  repayment 
of  that  debt,  and  depreciation.  As  Major  Leonard 
Darwin  points  out,  if  there  is  a  surplus  after  making 
this  provision,  that  surplus  is  the  nel  profit  available 
for  relief  of  rates.  If  there  is  a  deficit,  then  there 
is  a  loss» 

Regarded  in  this,  the  only  true  light,  has  municipal 
trading  produced  profits  in  relief  of  rates  ? 

This  cannot  be  ascertained  by  taking  picked  groups 
of  municipalities,  as  is  often  done.  We  must  have 
a  full  statement  of  the  financial  results  of  the  trading 
of  all  authorities.  And,  unfortunately,  that  is  not 
available. 

Taking  the  existing  incomplete  statistics  of  Muni- 
cipal Trade,  we  find  two  Local  Government  Board 
Returns  issued  in    1899   and   1902,  dealing  with  all 

^  Municipal  Trade,  Darwin,  p.  174. 
46 


The   Financial  Aspect 

"  reproductive  "  undertakings  carried  on  by  Municipal 
Corporations  in  England  and  Wales.  Note,  that  this 
by  no  means  covers  all  the  municipal  trading 
concerns.  In  1903  there  were  529  urban  district 
councils  and  466  rural  district  councils  engaged  in 
municipal  trading,  and  none  of  these  bodies  are 
comprised  in  the  Return. 

However,  for  what  it  is  worth,  the  table  on  pp. 
48-49  is  a  summary  of  the  Return  of  1903. 

Now,  there  have  been  issued  since  1903  partial 
Returns  of  the  financial  aspects  of  different  municipal 
ventures.  There  are,  for  instance,  Annual  Returns 
as  to  Electric  Lighting,  Tramways,  and  Gas  Works. 
The  local  Taxation  Returns  for  1904-5  (Part  5) 
contains  a  Supplementary  Statement  of  '*  Sums 
transferred  during  the  year  (1904-5)  in  aid  of  Rates, 
and  Transfers  from  other  accounts  to  make  up 
deficiencies  in  the  Revenues  of  the  Undertakings," 
and  the  curious  note  is  added — "  Where  shown  in 
the  Returns."  The  suggestion  possibly  is  that  the 
Returns  are  not  complete.  A  Second  Statement  in 
the  same  Blue  Book  gives  the  amounts  remaining 
in  Reserve,  Depreciation,  and  Insurance  Funds 
"  established  in  connection  with  trading  ventures " 
of  Borough  Councils.  The  number  of  Borough 
Councils  comprised  in  the  first  statement  is  192  ; 
in  the  second,  only  125.  It  is  to  be  observed  that 
these  tables  are  by  no  means  exhaustive.  The  same 
information  is  not  forthcoming  as  to  the  trading 
concerns  of  the  800  odd  urban  district  councils, 
who  had  invested  about  twelve  millions  in  such 
undertakings.  Apart  from  official  papers,  various 
tables   have  been   from   time   to   time    compiled    by 

47 


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49 


Socialism  in  Local  Government 

private  individuals  ;  and  a  large  amount  of  mis- 
cellaneous information  is  bandied  to  and  fro  in  the 
controversy  of  parties. 

However,  nothing  so  complete  as  the  Return  of 
1903  is  available.  And  in  spite  of  a  strong  tempta- 
tion to  analyse  later  and  less  complete  data,  our 
inquiry  will  be  confined  to  that  Return,  as  it  gives 
the  broadest  survey.  Our  criticism  thus  becomes 
more  clear.  Moreover,  it  is  in  the  main  equally  apphc- 
able  to  all  the  ascertained  results  of  later  years. 

In  the  first  place,  one  striking  feature  of  the 
Return  of  1903  is  that  it  comprises  the  great  under- 
takings of  a  monopoly  character  in  the  chief  towns. 
For  the  most  part,  those  enterprises  were  originally 
built  up  by  private  companies,  and  were  profit  pro- 
ducing when  taken  over  by  the  local  authorities. 
These  companies  could  hardly  fail  to  show  profits, 
seeing  that  they  supplied  public  services  for  which 
there  was  a  general  demand,  and  that  practically  no 
competition  existed.  Therefore,  after  the  transfer 
to  municipal  ownership  and  management  had  been 
made,  we  should  naturally  expect  the  profits  would 
continue  to  be  earned.  If  the  reverse  is  the  case, 
then  we  may  assume  that  the  original  idea  of  earning 
profits  in  relief  of  rates  has  been  abandoned,  or  in- 
efficient management  has  occurred. 

Looking  at  the  Summary  given  on  page  49,  it  will 
be  seen  that  it  shows  a  net  profit  of  ^378,281  on  a 
capital  of  over  one  hundred  millions  of  pounds,  or  a        | 
net  profit  of  7s.  6d.  per  cent. — a  very  poor  result. 

It  is  claimed,  however,  that  this  ^378,281  repre- 
sents a  relief  to  the  rates  equal  to  i|d.  in  the  pound 
on   the  ^55,076,000  of   rateable  value   in    the   299 

50 


The   Financial  Aspect 

boroughs  concerned.  This  is  not  the  fact.  On 
referring  to  another  part  of  the  Return — "  Mode 
in  which  Average  Annual  profit  has  been  applied, 
or  net  loss  has  been  met," — it  will  be  found 
that  over  ^^200,000  of  this  "profit"  was  applied 
to  extension  of  works,  capital  account,  reserve  fund, 
renewals,  reduction  of  bank  overdrafts,  &c.,  or  carried 
forward  to  next  account.  Therefore,  the  only  sum 
available  for  relief  of  rates  was  ^178,000,  or  an 
amount  equal  to  a  rate  of  about  |d.  in  the  pound. 

Now,  although  this  ^178,000  went  into  the 
municipal  treasury,  it  could  not  have  been  so  applied 
had  the  undertakings  been  properly  charged  (i)  with 
certain  expenses  incurred  on  their  behalf  but  paid 
out  of  the  rates,  (2)  with  a  sufficient  sum  on  account 
of  depreciation. 

We  have  now  come  to  the  crucial  point  in  our 
examination  of  municipal  trading  accounts.  Because 
it  is  beyond  dispute  that  if  it  can  be  proved  that  in 
many  instances  the  financial  statements  of  municipal 
trading  concerns  omit  important  items  on  the  expen- 
diture side,  and  that  those  items  are  defrayed  out  of 
the  rates,  and  that  insufficient  provision  is  made  for 
depreciation,  then  any  "  profit "  shown  must  be 
fictitious. 

Taking  the  first  point,  that  certain  expenses  in- 
curred on  behalf  of  the  undertakings  have  been 
charged  upon  the  rates,  or  to  other  municipal  de- 
partments, we  will  deal  with  a  few  of  the  principal 
items. 

Establishment  Charges. — In  no  less  than  130  of  the 
299  municipal  corporations  there  does  not  appear 
to  be  charged  against  their  undertakings  any  sum  in 

51 


Socialism  in  Local  Government 

respect  of  the  general  legal  and  establishment  service 
of  the  Corporations,  In  many  other  cases  only  a 
few  of  the  concerns  pay  anything  on  this  head. 
That  is  to  say,  the  trading  department  enjoys  the 
advantages  of  the  services  of  the  chief  Corporation 
officials  and  staff,  and  pays  nothing.  Roughly,  it 
may  be  estimated  that  another  ^100,000  ought  to 
be  charged  against  the  undertakings  in  respect  of 
these  services.  In  which  case  only  ^78,000  is  left 
in  relief  of  rates. 

Upon  this  point  some  interesting  evidence  was 
given  before  the  Departmental  Committee  upon 
Accounts  of  Local  Authorities,  1906.  Mr.  J.  S. 
Harmood  Banner,  M.P.  (Chairman  of  the  Finance 
Committee  of  the  Corporation  of  Liverpool  and 
Past- President  of  the  Institute  of  Chartered  Account- 
ants), insisted  that  a  certain  proportion  of  establish- 
ment charges  ought  to  be  borne  on  the  accounts  of 
trading  undertakings.  "  There  is  no  doubt  about  it, 
that  when  that  is  done  the  trading  communities  (the 
municipality;,  as  a  rule,  are  let  off  very  lightly  even 
then,  because  there  is  always  a  sort  of  feeling  not  to 
charge  them  more  than  is  necessary"  (2890). 

Tramways. — Another  important  omission  to  charge 
expenditure  against  trading  concerns  occurs  in  con- 
nection with  tramways.  It  has  been  discovered  that 
the  cost  of  street  widenings  and  improvements  made 
in  connection  with  municipal  tramways  have  been 
largely  borne  by  the  rates  instead  of  by  the  tramways 
accounts. 

In  order  to  make  the  matter  quite  clear,  it  is 
necessary  to  compare  the  position  of  a  private  com- 
pany and  a  municipal  concern.     As  a  rule,  when  a 

52 


The   Financial  Aspect 

private  company  wishes  to  construct  tramways  in  any 
area,  the  local  authority  makes  the  Company  pay  the 
whole  cost  of  any  street  widening  necessitated  by 
the  introduction  of  the  tramways.  For,  under  the 
Tramways  Act  of  1870,  a  certain  width  of  street 
must  be  preserved  for  other  traffic.  It  may  be 
observed  that  local  authorities  not  only  make  private 
companies  pay  the  whole  cost  of  street  improve- 
ments, but  very  often  impose  upon  them  other 
onerous  conditions. 

Let  us  examine  a  few  instances.  The  Chairman 
of  the  London  United  Tramways  (Mr.  C.  J.  Cater 
Scott),  speaking  at  the  Annual  Meeting  of  the  Com- 
pany in  March,  1908,  stated: — 

"  We  have  to  pay  very  heavy  wayleaves  to  various 
bodies,  and,  as  I  shall  show  you  presently,  they 
amount  to  -^3600  a  year.  Then  the  two  County 
Councils  of  Surrey  and  Middlesex  have  begun  by 
asking  ^4000  a  year  for  the  right  to  cross  Kew 
Bridge,  but  I  believe  it  has  since  been  reduced.  In 
addition  to  that,  we  have  had  to  pay  for  street  im- 
provements and  widenings  an  amount  of  ;^943,99i, 
which  represents  24^  per  cent,  of  the  total  capital 
expended  by  us  in  the  construction  of  our  tramways."^ 

In  the  case  of  the  Middlesex  tramways,  the  whole 
cost  of  street  widenings  up  to  50  feet  for  tramway 
purposes  is  charged  to  the  tramways  accounts. 

The  Metropolitan  Electric  Tramways  Company 
in  1908  proposed  to  extend  their  lines  in  Harrow 
Road  to  Edgware  Road.  The  Paddington  Borough 
Council  gave  their  consent  subject  to  the  Company 
carrying  out  a  number  of  street  widenings  along  the 

^  T/te  Economist,  March  28,  1908. 

53 


Socialism  in  Local  Government 

route  of  the  new  tramway.  The  estimated  cost  of  the 
construction  of  the  tramways  was  ^13,822,  and  that 
of  the  street  improvements,  including  paving  works, 
^^36,850.  The  latter  sum  includes  a  contribution  of 
^4500  to  the  cost  of  a  widening  already  executed,  and 
a  similar  sum  for  the  reconstruction  of  a  canal  bridge. 

The  Devonport  and  District  Tramways  Company 
paid  about  ^^i  1,000  in  respect  of  street  improve- 
ments in  Devonport.  These  improvements  were 
imposed  upon  the  Company  by  the  Corporation,  and 
no  part  of  the  cost  was  borne  by  the  rates. 

Having  seen  the  heavy  capital  expenditure  rightly 
laid  upon  tramway  companies  for  street  improvements 
made  on  their  behalf,  let  us  turn  to  the  position  of 
municipal  tramways  in  regard  to  the  same  matter. 

Many  of  the  large  towns  owning  and  working 
tramways  charge  little  or  nothing  to  their  tramways 
for  these  street  improvements.  In  the  case  of 
Liverpool,  Mr.  Councillor  A.  Armour  stated  "The 
Liverpool  debt  has  lately  been  increased  by  over  one 
million  pounds  for  the  cost  of  road  widenings,  of 
which  a  large  part  was  in  connection  with  the  tram- 
ways. When  it  was  sought  to  charge  the  Tramway 
Committee  with  a  moiety  of  the  expense  the  motion 
was  defeated,  as  it  would  have  deprived  the  dominant 
party  of  the  credit  of  profits  in  relief  of  the  rates."  ^ 

Manchester,  Leeds,  Halifax,  and  other  towns  have 
pursued  the  same  policy. 

Mr.  Harmood  Banner,  M.P.,  whose  evidence  we 
have  already  quoted,  stated  to  the  Committee  upon 
Accounts  of  Local  Authorities :  "  There  are  many 
street  widenings  which  are  very  desirable,  but  which 

^  Standard,  November  23,  1905. 
54 


The  Financial  Aspect 

would  not  have  been  undertaken  unless  the  tram- 
ways had  come  through  that  locality.  .  .  .  Take  a 
street,  a  narrow  street.  It  would  have  gone  on,  and 
probably  never  would  have  been  widened  ;  but  when 
the  tramways  come  and  they  cannot  get  through  it, 
it  is  a  thoroughfare,  and  at  once  they  get  an  Act  of 
Parliament,  and  they  start  to  widen  that  street. 
There  the  charge  will  come  on  the  general  rate  .  .  . 
the  charge  for  the  widening.  ...  I  do  not  know  of 
any  instances  where  these  widenings  have  been  put 
down  to  the  trading  undertaking.  .  .  .  Therefore,  in 
a  great  many  instances  going  on  now,  there  is  no 
true  comparison  between  the  results  of  trading  under- 
takings and  outside  companies,  simply  for  the  reason 
that  these  charges  go  against  the  general  rate  account 
instead  of  against  the  trading  account.  In  Liverpool 
we  take  certain  profits  from  the  trading  accounts, 
and  we  always  state  in  dealing  with  it  before  the 
Council  that  we  consider  that  not  as  an  actual 
profit  of  the  tramway  undertaking  or  other  trading 
undertaking,  but  we  consider  that  as  only  part  profit 
and  part  repayment  of  the  improvement  which  we 
have  done  for  them  in  order  to  make  their  trading 
easy  "  (2891). 

One  notorious  instance  of  this  method  of  re- 
lieving trading  ventures  at  the  expense  of  the  rates  is 
Ipswich,  where  capital  expenditure  to  the  extent  of 
^75,000  was  charged  to  the  rates,  instead  of  against 
the  tramways  accounts.     The  items  were  : — 

Street  improvements  for  trams  .         .         .     ^^48,199 

Altering  street  levels 15,600 

Purchase  of  horse  trams,  and  costs  .         .         .        11,206 

55 


Socialism  in  Local  Government 

Even  the  purchase  of  the  old  horse  trams  was  placed 
upon  the  rates.  It  is,  of  course,  easy  to  show  a 
profit  under  such  circumstances. 

Perhaps  the  most  debated  case  of  all  is  the  London 
County  Council  Tramways  system.  And  this  in- 
stance is  quoted  because,  though  London  was  not 
comprised  in  the  Return  of  1903,  it  affords  a  glaring 
example.  Specific  evidence  was  laid  before  the 
Royal  Commission  on  London  Traffic  by  Mr.  W.  H. 
Dickinson,  L.C.C.,  Sir  John  Benn,  L.C.C.,  and  Mr. 
G.  L.  Gomme  (the  Clerk  to  the  Council),  to  the  effect 
that  only  one-third  of  the  cost  of  street  widenings 
for  tramway  purposes  was  charged  against  the  tram- 
ways accounts,  the  other  two-thirds  being  paid  in 
equal  proportions  by  the  local  Borough  Council  and 
the  County  Fund — that  is  to  say,  the  rates.  But 
when    a    Return  was    presented    to    the   Council  in 

1907,  it  was  found  that  practically  only  one-eighth 
of  the  cost  of  tramway  improvements  was  being 
charged  against  the  tramways.  In  their  "  Report 
on    the    Council's    Tramways,"   dated    14th    March 

1908,  Messrs.  W.  B.  Peat  and  F.  W.  Pixley  (Present 
and  Past-Presidents  of  the  Institute  of  Chartered 
Accountants)  dealt  with  the  allocation  of  the  cost  of 
"  Improvements  undertaken  or  proposed  in  connec- 
tion with  tramway  schemes."  After  giving  general 
examples,  the  auditors  summed  up  as  follows  : — 

"  Summarising  our  remarks,  therefore,  in  con- 
nection with  the  expenditure  on  improvements 
undertaken  or  proposed  in  connection  with  tramway 
schemes  ...  we  find  the  total  expenditure  up  to 
31st  March,  1907,  was  ^^752, 128,  lis.  8d.  ;  of  this 
^190,990,  6s.    id.  has  been  charged  to  tramways, 

56 


The   Financial  Aspect 

and  ;^i 73,690,  7s.  id.  has  been  contributed  by  local 
authorities,  the  remainder,  viz.  ;^387,438,  i8s.  6d., 
being  charged  to  Improvement  Account.  A  sub- 
stantial, but  as  yet  unascertained,  proportion  of  this 
last  figure,  in  our  opinion,  should  be  charged  to 
Tramways  Capital  Account." 

"The  Expenditure  on  <  Improvements  for  the 
purposes  of  General  Traffic'  .  .  .  amounted  at  31st 
March,  1907,  to^i,oo7,io3,  i  is.  2d. ;  the  local  autho- 
rities concerned  contributed  ^142,982,  is.  id.,  the 
balance, ^^864, 1 2 1,  los,  id., being  charged  to  Improve- 
ment Account.  In  our  opinion  a  considerable,  but  as 
yet  unascertained,  proportion  of  this  latterfigure  should 
also  be  charged  to  Tramways  Capital  Account."  ^ 

The  Board  of  Trade  Return  for  1907  relating  to 
Street  Tramways,  &c.,  gives  the  details  of  capital 
expended  on  ''  Street  and  Road  Improvements  (in- 
cluding purchase  of  land)  so  far  as  necessitated  by 
the  tramways  or  light  railways."  It  shows  that  some 
nine  companies  and  two  municipalities  failed  to 
supply  any  details.  One  of  the  companies — the 
London  United  Tramways — has  spent,  as  we  know, 
^943,991  on  street  widenings  and  improvements. 
Adding  that  sum  to  the  figures  in  the  Return,  we  get 
the  following  result  : — 


Capital  Expended. 

Cost  of  Street 
Widenings,  &c. 

Companies 

Local  Authorities  . 

£ 

22,356,544 

41,735,547 

£ 

1,314,529 
1,175,954 

'  Paragraphs  60  and  6 1 . 

57 


Socialism  in  Local  Government 

This  shows  that  the  percentage  of  capital  spent  on 
street  widenings,  &c.,  by  companies  is  double  that 
paid  by  local  authorities.  It  is  clear  that  while 
municipal  tramways  are  thus  rate-supported,  their 
accounts  are,  to  a  large  extent,  incomplete. 

Electricity. — With  regard  to  Municipal  Electrical 
undertakings,  apart  from  the  insufficiency  of  the 
charges  for  establishment  services,  it  is  a  common 
practice  to  bolster  up  the  electrical  department  by 
allowing  it  to  charge  very  heavily  for  public  lighting. 
Not  only  is  there  a  higher  charge  for  street  lighting 
than  private  companies  make,  but  very  often  an 
extravagant  system  of  lighting  is  adopted  in  order 
that  a  large  amount  of  electricity  may  be  con- 
sumed. 

A  Board  of  Trade  Return,  dated  21st  December, 
1907,  of  charges  by  local  authorities  and  companies 
in  and  around  London,  showed  that  local  autho- 
rities owning  electrical  works  were  charging  for 
public  lighting  prices  ranging  from  i.29d.  up  to  4.3d. 
per  unit.  On  the  other  hand,  the  electrical  com- 
panies supplied  public  lighting  at  from  |d.  to  2.93d. 
per  unit. 

Of  the  extravagant  consumption  of  light  by 
boroughs  possessing  electric  works,  we  can  judge 
from  the  following  tables  prepared  by  the  writer  a 
few  years  ago,  and  extensively  quoted,  in  which  the 
London  Boroughs  are  grouped  into  comparative 
sections.     The  figures  are  for  the  year  1903-4.^ 

As  far  as  possible,  the  boroughs  have  been  ar- 
ranged with  the  object  of  bringing  together  those 
districts  which   are  similar  in  character,  and  which 

^  London  Statistics^  vol.  xvi. 
58 


The  Financial  Aspect 

also  offer  a  fair  basis  of  comparison  as  regards  their 
street  mileage. 

The    boroughs    having     municipal    electric     light 
works  are  starred  : — 


Borough. 

Street 
Mileage. 

Cost  of  Public 
Lighting. 

Cost  per 
Mile. 

£ 

£ 

*Islington .... 

124 

32,170 

259 

*Hackney 

104 

16,215 

156 

Wandsworth    . 

176 

17,681 

100 

Lambeth .... 

148^ 

13.573 

91 

Camberwell 

1 30  J 

11,752 

90 

Lewisham 

108 

7,809 

72 

The  result  given  by  this  group  shows  that  muni- 
cipal electricity  results  in  street  lighting  at  a  cost  of 
£10'],  IDS.  per  mile,  as  against  a  cost  of  ;^88,  5s. 
per  mile  in  boroughs  where  there  was  no  municipal 
concern.  In  reply  to  a  question  by  Mr.  Councillor 
Saint,  it  was  admitted  at  a  meeting  of  the  Borough 
Council  that  in  the  third  quarter  of  1906  in  Isling- 
ton 100  miles  of  road  were  lighted  by  gas  costing 
^^4077  ;  20  miles  of  roads  were  lighted  by  municipal 
electricity  costing  £^1^'^.  The  cost  of  the  public 
company's  gas  works  out  at  ^40  a  mile,  the  muni- 
cipal electricity  at  ^262  a  mile,  or  more  than  six 
and  a  half  times  as  much. 

The  Boroughs  of  St.  Pancras,  Stepney,  Battersea, 
and  Bermondsey  all  possess  municipal  electric  works. 
These  boroughs  cover  a  total  of  326^  miles  of  roads, 
which  they  light  at  an  aggregate  cost  of  ^^63,064, 
and  at  an  average  cost  per  mile  of  ;^i93. 

59 


Socialism  in  Local  Government 


Borough. 

Mileage. 

Cost. 

Cost  per 
Mile. 

*Poplar      .... 
*South\vark 

Bethnal  Green 

Deptford. 

6si 

65 
40 

52 

£ 

12,702 

11,398 

4,797 
3,847 

£ 
194 

175 
120 

74 

This  table  shows  that  municipal  trading  boroughs 
do  their  work  at  an  average  cost  per  mile  of 
;^i84,  while  non-trading  boroughs  do  it  at  a  cost 
of  £()']  per  mile. 


Borough. 

Mileage. 

Cost. 

Cost  per 
Mile. 

£ 

£ 

*Hampstead 

57 

11,658 

204 

"*St.  Marylebone 

60 

11,924 

198 

*Fulham    .... 

56 

10,858 

194 

Paddington 

59i 

10,472 

176 

*Hammersmith 

55 

8,374 

152 

Greenwich 

58 

4,616 

79 

This  group  gives  the  result  that  municipal  enterprise 
lights  at  an  average  of  £1^"]  per  mile.  Non-trading 
boroughs  do  the  work  at  £12'],  ids.  per  mile. 

Of  course,  it  is  to  be  observed  that  gas  costs  about 
one-third  more  in  North  London  than  it  does  on 
the  south  side  of  the  Thames,  but  even  that  cannot 
account  for  the  extraordinary  difference  between  the 
cost  of  efficient  gas  lighting  of  London  streets  and 
the  same  service  by  municipal  electricity.  We  may 
well  ask — Why  should  the  ratepayers  be  mulcted  in 

60 


The  Financial  Aspect 

enormous  rates  for  street  lighting  in  order  that  a 
"  profit "  may  be  shown  on  the  municipal  electric 
undertaking  ? 

While  many  supporters  of  Municipal  Trading  deny 
that  there  is  any  manipulation  of  accounts,  Mr.  G. 
B.  Shaw  in  his  work,  The  Common  Sense  of  Municipal 
Trading,  states : — 

"  The  very  municipalities  themselves  are  domi- 
nated by  the  commercial  view,  and  often  encourage 
themselves  rather  childishly,  keeping  their  accounts 
in  such  a  way  as  to  produce  the  utmost  possible 
appearance  of  commercial  prosperity  by  throwing 
as  much  as  possible  of  the  expenses  on  the  general 
rate  whilst  crediting  the  receipts  of  each  municipal 
service  to  its  special  department." 

Depreciation. — The  second  point,  that  no  sufficient 
allowance  for  depreciation  has  been  made  in  the 
case  of  municipal  undertakings,  is  based  on  the  fact 
that  in  the  Return  of  1903  only  ^^193, 274  is  stated 
to  be  annually  set  aside  as  depreciation  on  over 
;^i 2 1,000,000,  which  is  equal  to  3s.  2d.  per  cent.  Mr. 
Holt  Schooling,  the  well-known  actuarial  authority, 
has  pointed  out  that  no  less  than  "  103  millions  out 
of  the  121  millions  of  capital  are  in  water  works, 
gas  works,  electricity  supply,  and  tramways,"^  and 
these  rightly  necessitate  the  setting  aside  of  a  con- 
siderable sum  for  depreciation.  Nevertheless,  in  this 
group  only  -^177,000  yearly  is  set  aside  for  deprecia- 
tion upon  a  capital  of  103  millions,  or  3s.  5d.  per 
;^ioo  of  capital  invested.  In  fact,  in  only  88  out 
of  the  1060  undertakings  comprised  in  the  Return 
was  any  amount  stated  as  set  apart  for  depreciation. 

^  fortnightly  Review,  August  1906. 
6i 


Socialism  in  Local  Government 

A  leading  authority,  Auditors^  their  Duties  and 
Responsibilities,  by  F.  W.  Pixley  (1906),  states  as 
follows  : — "  In  order  to  produce  accurate  results  of 
the  Trading  Departments  of  Local  Authorities,  the 
Accounts  must  be  treated  on  exactly  the  same  footing 
as  they  would  be  if  they  belonged  to  a  trading  Cor- 
poration or  Company,  and  the  audit  should  be  per- 
formed in  precisely  the  same  manner.  No  trading 
account  can  be  considered  as  accurate  which  is  not 
charged  fully  with  an  allowance  for  wear  and  tear 
of  Buildings,  Fixed  Plant,  and  Machinery,  as  well 
as  the  implements  in  daily  use  by  the  workmen. 
At  the  same  time,  a  Balance  Sheet  or  Statement  of 
Liabilities  and  Assets  cannot  be  correct  unless  the 
capital  value  of  the  works  has  been  reduced  by  the 
amount  charged  against  the  Revenue  Account  in 
respect  of  such  wear  and  tear,  or  what  is  known 
amongst  professional  Accountants  as  Depreciation." 

In  the  case  t)f  Tramways,  Mr.  D.  McColl,  in 
his  work  on  Tramway  Book-keeping  and  Accounts, 
lays  down  the  following  recommendations  as  to 
allowances  with  reference  to  depreciation  : — 

Rail  bonding y\  per  cent. 

Conduits  and  manholes  .         .         .         .2% 

Feeder  cables  .....  3 

Buildings         ......  2^ 

Machinery  and  plant       .         .         .         •  7^ 

Power  stations 5 

Rolling  stock 7^ 

With  regard  to  Electric  Lighting  Works,  Mr. 
Pixley  states  that  the  following  may  be  taken  as  a 
guide  to  the  proper  percentage  to  be  charged  against 
Revenue  on  the  Capital  Account  : — 

62 


The  Financial  Aspect 


Freehold  buildings  . 
Engines  and  boilers 
Accumulators    .... 
Meters,  Dynamos  and  Turbines 
Transformers    .... 
Mains  and  cables     . 


I  to  2  per  cent. 
yh  to  lo  per  cent. 

12+ 
7| to  ID       „ 

lo 

7s 


>) 


Applying  an  all-round  figure  of  5  per  cent,  to  the 
municipal  electrical  and  tramway  works,  the  result 
is  that  over  a  million  pounds  per  annum  ought  to 
have  been  set  aside  for  depreciation.  As  a  matter 
of  fact,  only  some  ^70,000  has  been  so  provided. 
It  is  evident,  therefore,  that  if  an  adequate  allowance 
had  been  made,  so  far  from  any  profit  appearing 
in  relief  of  rates,  there  would  have  been  a  large 
deficit. 

It  is  contended,  however,  by  Municipal  Traders 
that  it  is  not  necessary  for  a  municipality  to  make 
any  provision  for  depreciation  in  respect  of  its 
trading  departments,  inasmuch  as  the  Sinking  Fund 
by  which  loans  are  repaid  is  a  sufficient  safeguard. 
This  contention  is  unsound.  "  Depreciation  is  an 
element  appertaining  to  Trading  or  Profit  and  Loss 
Account.  The  Sinking  Fund  charge  is  an  element 
of  capital  redeemed  out  of  profits  or  rates,  as  the 
case  may  be.  .  .  .  The  Accounts  relating  to  the 
works  of  a  trading  undertaking  of  a  corporation 
must  be  treated  as  subject  to  the  same  charge  for 
depreciation  as  in  the  case  of  private  ownership. 
In  any  case,  the  deterioration  of  works  is  the  same, 
the  risk  of  supersession  (a  contingency  prudentially 
covered  by  the  Depreciation  charge)  is  the  same, 
the  provision  to  be  made  for  ultimate  reinstatement 
is  the  same."  ^ 

^  Municipal  Accounts  and  their  Audit,  E.  Guthrie. 
63 


Socialism  in  Local  Government 

With  regard  to  the  Sinking  Fund,  "  the  true  nature 
of  the  loan  in  respect  of  the  repayment  of  which 
the  Sinking  Fund  in  the  case  of  Corporations  is 
provided,  is  precisely  the  same  as  a  loan  taken  by 
a  private  firm  or  a  joint-stock  company,  and  the 
true  nature  of  the  Corporation  Sinking  Fund  con- 
tribution is  precisely  the  same  as  the  instalments  of 
principal  and  interest  in  repayment  of  these,  and  any 
loans,  whether  open  loans  or  debentures  of  private 
firms  or  joint-stock  companies.  These  loans  are 
simply  money  owing,  and,  with  interest,  have  got 
to  be  repaid." 

If  any  proof  were  needed  of  the  perilous  position 
of  electricity  undertakings,  it  is  afforded  by  the  com- 
ments of  The  Municipal  Journal^  the  organ  of  Muni- 
cipal Traders. 

"  The  question  of  depreciation  has  reached  an 
acute  stage  with  many  of  the  undertakings  which 
have  been  at  work  about  ten  years.  It  was  the 
custom  of  consulting  engineers  in  those  days  to 
instal  a  number  of  comparatively  small  generating 
sets.  These  are  to-day  out  of  date,  and  out  of  place, 
for  they  are  not  only  wasteful  in  the  space  occupied, 
and  the  quantity  of  oil,  of  steam,  and  magnitude  of 
repairs,  but  even  at  their  most  economical  loads 
their  efficiency  falls  far  short  of  what  can  be  obtained 
from  plants  of  modern  design.  They  are  an  admitted 
incubus  to  an  undertaking,  and  an  enigma  to  the 
engineer  who  is  unlucky  enough  to  have  them  on  his 
hands.  The  problem  is  what  can  be  done  with 
them.  To  scrap  or  discard  these  'toys'  is  a  luxury 
few  places  can  afford,  inasmuch  as  the  difference 
between  their  original  cost  and  the  amount  written 

64 


The  Financial  Aspect 

off  by  the  proportion  of  the  annual  sinking  fund 
payments  is  so  large  that  it  would  be  difficult  to 
obtain  sanction  from  a  committee  to  place  it  against 
the  income  in  any  one  year.  Yet  this  is  the  only 
course  open  where  there  is  no  reserve  or  depreciation 
fund  to  meet  the  extraordinary  expenditure."  ^ 

Not  only  do  the  general  principles  of  accountancy 
insist  upon  an  adequate  provision  for  depreciation, 
but  the  decision  of  Parliamentary  Committees  and 
the  evidence  of  Local  Government  Board  officials  is 
also  in  favour  of  a  Depreciation  Fund  being  formed 
for  Municipal  Undertakings. 

The  Report  of  the  Departmental  Committee  on 
Accounts  of  Local  Authorities,  1907,  stated  that 
"  the  general  object  of  provision  for  depreciation  is 
to  ensure  that  an  asset  which  ceases  to  be  of  value 
will,  at  the  time  of  its  exhaustion,  cease  to  be  re- 
presented by  a  charge  upon  the  revenue  ;  and  the 
question  how  far  this  purpose  is  met  by  sinking 
funds  and  redemption  funds  depends  mainly  on  the 
correspondence  of  the  life  of  the  asset  with  the 
period  allowed  for  the  repayment  of  the  capital 
debt.  .  .  .  Such  assets  as  lands  or  buildings  may 
be  entirely  freed  from  debt  at  a  period  when  their 
value  is  by  no  means  exhausted  and  may  even  have 
increased  ;  while,  on  the  other  hand,  it  is  possible, 
or  may  even  be  probable,  that  as  regards  a  new  kind 
of  undertaking  the  period  allowed  for  repayment  of 
debt  might  have  been  too  long  ;"  and,  in  a  later 
paragraph,  they  suggest  that,  "  although  in  general 
the  loan  payments  may  provide  sufficiently  for  de- 
preciation,   it    may   in   some   cases    be   a   matter   of 

^   The  Municipal  Journal,  May  5,  1905. 

65  E 


Socialism  in  Local  Government 

prudence  to  make  further  provision,  to  a  limited 
extent,  to  meet  luiforeseen  expenditure,  or  to  equalise 
the  cost  of  repairs  falling  on  a  series  of  years,  or, 
again,  to  provide  for  renewals  in  cases  where  sub- 
sequent experience  has  proved  that  too  long  a  period 
was  in  fact  originally  granted  for  the  repayment  of 
the  debt." 

Mr.  Banner,  M.P.,  in  his  evidence,  stated  with 
regard  to  sinking  funds  :  "  To  use  a  rather  strong 
word,  it  is  ridiculous  the  way  Parliament  is  extend- 
ing these  sinking  funds  and  making  the  life  of  these 
things  much  longer  than  they  can  possibly  last  or  be 
appropriate"  (2940). 

It  is  to  be  noted  that  the  Select  Committee  on  the 
Repayment  of  Loans  by  Local  Authorities,  1902, 
laid  special  stress  on  the  unsatisfactory  conditions 
under  which  the  officials  of  the  Local  Government 
Board  have  to  gauge  the  life  of  an  undertaking  for 
the  purpose  of  fixing  the  period  for  repa^anent  of 
the  loan. 

"  In  deciding  upon  the  probable  duration  of  the 
useful  life  of  any  work,  the  officers  of  a  department 
have  to  deal  with  many  points  which  are  purely 
matters  of  prophecy  ;  they  are  not  empowered  to 
superintend  the  carrying  out  of  the  plans  placed 
before  them,  and  have  no  adequate  means  of  ascer- 
taining or  controlling  the  amount  of  attention  given 
to  the  maintenance  of  the  works  when  completed. 

"The  shifting  of  population,  the  alteration  of 
accepted  standards  of  efficiency,  the  variation  of 
boundaries,  the  progress  of  science  and  discovery, 
exceptionally  violent  storms  and  a  variety  of  other 
causes  may  upset  calculations  based  upon  even  the 

66 


The  Financial  Aspect 

widest  experience.  .  .  .  Some  of  the  witnesses  who 
have  given  evidence  on  behalf  of  the  larger  corpora- 
tions have  assured  the  Committee  that  a  Repairs  or 
Depreciation  Fund  is  provided  by  them  in  respect  of 
most  of  their  undertakings,  but  the  Return  obtained 
by  Sir  Henry  Fowler  in  1899  shows  that  over  an 
average  of  five  years  the  average  annual  contribution 
to  such  funds  in  respect  of  the  debts  which  are  called 
'  Reproductive  Debts '  only  amounted  to  one-tenth 
of  one  per  cent."  (par.  40). 

As  to  the  failure  of  municipal  works  before  the 
loans  on  them  have  been  discharged,  important  evi- 
dence is  afforded  by  the  statement  in  the  Report, 
"  Several  instances  have  been  laid  before  the  Com- 
mittee in  which  the  money  borrowed  has  been  ex- 
pended on  subjects  which  have  become  worn  out  or 
obsolete  before  the  loan  in  respect  of  these  subjects 
has  been  completely  repaid."  "The  Local  Govern- 
ment Board  supplied  the  Committee  with  particulars 
of  29  cases  which  came  before  the  Board  between 
April  8th  and  May  13th  of  the  present  year,  in  which 
works,  or  some  portions  of  them,  have  failed  to  last 
for  the  period  allowed  for  repayment."  In  other 
words,  assuming  that  the  month  was  a  normal  one, 
some  300  cases  of  municipal  works  which  have  be- 
come useless  before  the  debt  on  them  has  been 
discharged,  come  before  the  Board  each  year. 

That  remarkable  fact  is  decisive  proof  of  the 
necessity  for  adequate  depreciation  and  renewal 
funds  in  regard  to  municipal  undertakings. 

We  have  already  considered  a  formidable  array  of 
facts  showing  that  the  trading  accounts  of  municipal 

67 


Socialism  in  Local  Government 

authorities  are  incomplete.  Any  doubt  still  remain- 
ing must  be  dispelled  by  the  pronouncements  of 
Government  Committees  upon  this  point. 

The  Select  Joint-Committee  on  Municipal  Trading, 
appointed  in  1903,  devoted  its  attention  to  municipal 
accounts,  as  it  *'  felt  that  any  attempt  to  survey  the 
general  subject  of  Municipal  Trading  could  have 
only  led  to  a  second  postponement  of  the  inquiry." 

The  following  are  the  germane  paragraphs  in  their 
Report : — 

"  (7)  Whatever  view  may  be  taken  of  the  proper 
limits,  if  any,  which  can  be  set  to  municipal  trading, 
it  is  clearly  important  that,  wherever  it  exists,  rate- 
payers should  not  be  less  fully  and  continuously 
informed  of  the  success  or  failure  of  each  under- 
taking than  if  they  were  shareholders  in  an  ordinary 
trading  company. 

"  (8)  In  a  large  number  of  cases  this  is  undoubtedly 
done.  But  there  is,  in  some  instances,  evidence  to 
a  contrary  effect,  and  in  view  of  the  ever-increasing 
number  and  magnitude  of  municipal  undertakings  it 
is  most  desirable  that  a  high  and  uniform  standard 
of  account  keeping  should  prevail  throughout  the 
country. 

"(10)  The  Committee  have  directed  full  attention 
to  the  question  of  Audit. 

"(11)  The  Committee  recommend  that  a  uniform 
system  of  audit  should  be  applied  to  all  the  major 
local  authorities,  viz.  the  Councils  of  Counties,  Cities, 
Towns,  Burghs,  and  of  Urban  Districts. 

"(12)  At  present  Municipal  Corporations  in  Eng- 
land and  Wales,  with  a  few  exceptions,  are  only 
subject   as   regards   audit   to   the    provisions    of    the 

68 


The  Financial  Aspect 

Municipal  Corporations  Act,  1882,  by  which  one 
auditor,  who  must  be  a  member  of  the  Town 
Council,  is  nominated  by  the  Mayor,  and  two,  who 
cannot  be  members  of  the  Town  Council,  are  elected 
by  the  ratepayers. 

'<  (13)  The  evidence  shows  that  no  effective  system 
of  audit  is  thus  supplied.  The  elective  auditors  are 
poorly  paid,  or  are  unpaid  altogether,  little  interest 
is  taken  in  their  election,  and  although  in  some  cases 
they  are  able  to  lay  a  finger  on  a  particular  irregu- 
larity, it  is  not  clear  that  they  could  not  make  the 
same  discovery  in  the  capacity  of  active  ratepayers. 
No  complete  or  continuous  audit  is  ever  attempted 
by  them. 

"(14)  All  County  Councils,  the  London  Borough 
Councils,  and  Urban  District  Councils  are  subject  to 
the  Local  Government  Board  audit.  This  audit  is 
carried  out  by  District  Auditors  who,  as  a  rule,  are 
not  accountants,  and  are  not,  in  the  opinion  of  the 
Committee,  properly  qualified  to  discharge  the  duties 
which  should  devolve  upon  them.  By  special  local 
Acts  the  Corporations  of  Tunbridge  Wells,  Bourne- 
mouth, and  Southend-on-Sea  must,  and  the  Corpora- 
tion of  Folkestone  may,  adopt  the  Local  Government 
Board  system  of  audit.  The  duties  of  the  auditors  seem 
to  be  practically  confined  to  certification  of  figures, 
and  to  the  noting  of  illegal  items  of  expenditure. 

"(15)  To  apply  this  system  of  audit  to  Municipal 
Corporations  would  arouse  strenuous  opposition  from 
them,  and  the  course  may  be  considered  impracti- 
cable ;  but,  in  addition  to  this,  the  fact  that  district 
auditors  are  not  accountants  seems  to  unfit  them  as 
a  class  for  the  continuous  and  complicated  task  of 

69 


Socialism  in  Local  Government 

auditing  the  accounts  of  what  are  really  great  com- 
mercial businesses. 

"(i6)  The  Committee  accordingly  recommend 
that  :— 

(a)  The  existing  systems  of  audit  applicable  to 
corporations,  county  councils,  and  urban 
district  councils  in  England  and  Wales  be 
abolished. 

(b)  Auditors,  being  members  of  the  Institute  of 
Chartered  Accountants,  or  of  the  Incorpo- 
rated Society  of  Accountants  and  Auditors, 
should  be  appointed  by  the  three  classes  of 
local  authorities  just  mentioned. 

(c)  In  every  case  the  appointment  should  be 
subject  to  the  approval  of  the  Local  Govern- 
ment Board,  after  hearing  any  objections 
made  by  ratepayers,  and  the  auditor,  who 
should  hold  office  for  a  term  not  exceeding 
five  years,  should  be  eligible  for  reappoint- 
ment and  should  not  be  dismissed  by  the 
local  authority  without  the  sanction  of  the 
Board. 

(d)  In  the  event  of  any  disagreement  between 
the  local  authority  and  the  auditor  as  to  his 
remuneration,  the  Local  Government  Board 
should  have  power  to  determine  the  matter. 

(e)  The  Scots  practice  of  appointing  auditors 
from  a  distance,  in  preference  to  local  men, 
to  audit  the  accounts  of  small  burghs  should, 
in  similar  cases,  be  adopted  in  England. 

''  (17)  The  Committee  are  of  opinion  that  it  should 
be  made  clear  by  statute  or  regulation  that  the 
duties  of  those  entrusted  with  the  audit  of  the  local 

70 


The  Financial  Aspect 

accounts  are  not    confined  to    mere    certification  of 
figures.     They  therefore  further  recommend  that : — 

(a)  The  auditor  should  have  the  right  of  access 
to  all  such  papers,  books,  accounts,  vouchers, 
sanctions  for  loans,  and  so  forth,  as  are 
necessary  for  his  examination  and  certificate. 

(b)  He  should  be  entitled  to  require  from  Officers 
of  the  Authority  such  information  and  explana- 
tion as  may  be  necessary  for  the  performance 
of  his  duties. 

(c)  He  should  certify  : — 

(i)  that  he  has  found  the  accounts  in  order, 
or  otherwise  as  the  case  may  be  ; 

(2)  that  separate  accounts  of  all  trading 
undertakings  have  been  kept,  and  that 
every  charge  which  each  ought  to  bear 
has  been  duly  debited  ; 

(3)  that  in  his  opinion  the  accounts  present 
a  true  and  correct  view  of  the  trans- 
actions and  results  of  trading  (if  any) 
for  the  period  under  investigation  ; 

(4)  that  due  provision  has  been  made  out 
of  Revenue  for  the  repayment  of  Loans, 
that  all  items  of  receipts  and  expenditure 
and  all  known  liabilities  have  been 
brought  into  account,  and  that  the  value 
of  all  assets  has  in  all  cases  been  fairly 
stated. 

''(18)  Auditors  should  be  required  to  express  an 
opinion  upon  the  necessity  of  reserve  funds,  of 
amounts  set  aside  to  meet  depreciation  and  obsoles- 
cence of  plant  in  addition  to  the  statutory  sinking 
funds,  and  of  the  adequacy  of  such  amounts. 

71 


Socialism  in  Local  Government 

"(19)  The  auditor  should  also  be  required  to 
present  a  report  to  the  Local  Authority.  Such 
report  should  include  observations  upon  any  matters 
as  to  which  he  has  not  been  satisfied,  or  which  in 
his  judgment  called  for  special  notice,  particularly 
with  regard  to  the  value  of  any  assets  taken  into 
account. 

"  (20)  The  Local  Authority  should  forward  to  the 
Local  Government  Board  both  the  detailed  accounts 
and  the  report  of  the  auditor  made  upon  them.  It 
should  be  the  duty  of  the  auditor  to  report  in- 
dependently to  the  Board  any  case  in  which  an 
authority  declines  to  carry  out  any  recommendation 
made  by  him. 

"(25)  With  a  continuous,  vigilant,  and  thoroughly 
efficient  system  of  inspection  and  audit,  the  surest 
guarantee  to  the  ratepayers  against  extravagance  is 
to  be  found  in  the  deterrent  effect  of  public  exposure, 
in  addition  to  the  existing  legal  remedies. 

"(27)  The  Committee  suggest  that  in  view  of  the 
large  changes  recommended  by  them,  it  might  be 
advisable  to  create  a  new  bodv,  in  the  form  of  a 
Board  of  Commissioners  of  Local  Audit,  in  some 
respects  analogous  to  the  Railway  Commission.  This 
body  could  be  entrusted  with  the  powers  which  the 
Committee  recommend  in  their  Report  should  be 
vested  in  the  Local  Government  Board. 

"(29)  The  Committee  are  of  opinion  that  it 
would  be  advisable  to  continue  investigation  into 
other  branches  of  the  subject  of  Municipal  Trading 
in  a  future  session  of  Parliament." 

This  Report  aroused  the  animus  of  Administrative 
Socialists,  but  public  opinion   eventually  forced  the 

72 


The   Financial  Aspect 

Local  Government  Board  to  appoint  in  January, 
1906,  a  Departmental  Committee  to  inquire  "into 
the  systems  on  which  the  accounts  of  local  authorities 
in  England  and  Wales  are  at  present  kept,  and  .  .  . 
on  what  system  the  accounts  should  be  kept."  The 
Committee  was  powerfully  constituted.  It  held  forty 
meetings,  and  "  heard  evidence  from  twenty-eight 
witnesses,  of  whom  six  were  District  Auditors,  and 
fourteen  were  nominated  by  the  Association  of  Poor 
Law  Unions,  Rural  District  Councils,  Urban  District 
Councils,  Municipal  Corporationsand  County  Councils, 
the  London  County  Council,  the  Institute  of  Municipal 
Treasurers  and  Accountants,  the  County  Accountants 
Society,  the  Society  of  Accountants  and  Auditors, 
and  the  Institute  of  Chartered  Accountants." 

With  regard  to  Municipal  Trading  accounts,  the 
Committee  made  the  important  statement  that  "  the 
system  of  income  and  expenditure  is  necessary,  by 
general  agreement,  for  all  trading  accounts  "  (par.  35) 
and  purely  trading  accounts  are  commonly  kept  on 
those  lines  in  the  accounts  of  most  Town  Councils, 
and  of  some  other  authorities.  Still,  even  in  many 
of  those  accounts,  it  appears  that  ''  income  and  ex- 
penditure "  principles  are  not  fully  applied  "  (par.  10). 

After  declaring,  with  reference  to  the  Returns  to 
the  Local  Government  Board,  that  "  neither  the 
Returns  nor  the  Financial  Statements  profess,  nor 
are  they  able,  to  show  the  true  financial  position  of 
the  various  authorities,"  the  Committee  summarise 
their  opinions  "  as  regards  the  existing  systems  of 
accounts  of  local  authorities  "  by  stating,  vikr  alia, 
that :  "  It  is  evident  that  the  accounts  are  not  kept 
on  any  uniform  system,  but  on  various  systems.  .   .   . 

73 


Socialism  in  Local  Government 

The  chief  causes  of  this  want  of  uniformity  are  (a) 
the  vague  terminology  of  Acts  of  ParHament,  (b) 
the  absence  of  sufficiently  precise  regulations  and 
definitions,  and  (c)  the  increasing  sense  of  the  in- 
adequacy of  the  purely  cash  system  of  account 
keeping." 

The  Committee  in  Part  II.  of  their  report  make 
important  recommendations  as  to  how  the  accounts 
should  be  kept  in  the  future  : — 

"(65)  Separate  revenue  accounts  must  be  kept, 
and  separate  net  revenue  and  balance  sheets  must 
be  prepared  in  respect  of  all  trading  undertakings. 
The  term  'trading  undertakings'  may  be  taken  to 
mean  gasworks,  waterworks,  electricity,  tramway, 
and  light  railway  undertakings,  and  any  other  excep- 
tional undertakings  (such  as  harbours  and  ferries) 
which  are  carried  on  under  local  Acts,  and  in  respect 
of  which  it  is  requisite  to  arrive  at  an  accurate  state- 
ment of  profit  and  loss. 

"  So  far  as  the  Committee  are  aware,  Parliament, 
though  it  has  in  many  cases  required  separate  ac- 
counts to  be  kept  in  respect  of  particular  services,  has 
in  no  case  defined  the  precise  meaning  to  be  attached 
to  the  requirement,  and  the  practice  of  local  autho- 
rities in  this  respect  appears  to  vary.  It  is,  however, 
clear  that  properly  kept  records  must  be  maintained 
suitable  to  the  character  of  the  undertaking,  and  that 
these  records  must  be  adapted  to  effective  check  in 
detail  and  to  the  ultimate  preparation  of  annual 
statements  of  account,  which  will  not  only  show 
results  under  the  necessary  sub-heads  of  income 
and  expenditure,  but  will  also  bring  out  the  net  gain 
or  loss,  and  its  appropriation. 

74 


The   Financial  Aspect 

"(66)  The  line  of  demarcation,  however,  between 
trading  accounts  and  other  accounts  is  not  always 
very  distinct  ;  and  there  may  be  some  difficulty  in 
determining  the  extent  to  which  separate  accounts 
should  be  kept  in  regard  to  certain  services  which 
are  carried  on  by  local  authorities  under  their 
general  statutory  powers,  and  which  though  not 
expected  to  be  profitable  might  be  expected  to  sup- 
port themselves  independently  of  the  rates.  To  this 
class  belong,  for  example,  housing  schemes  and 
water  supplies  carried  on  under  the  general  law  ; 
and  again,  all  such  works  as  are  re-chargeable, 
partly,  or  entirely  to  other  authorities,  or  to  private 
persons  as  in  the  case  of  private  street  works  and 
improvements. 

"  Such  undertakings  as  these  should  be  dealt  with 
in  separate  revenue  accounts,  bringing  out  the 
surplus  or  deficiency  in  each  case.  This  system  as 
a  general  rule  should  apply  also  to  public  libraries, 
baths,  and  wash-houses,  parks  and  recreation  grounds, 
burial  grounds,  and  other  such  services  which, 
though  in  different  degrees  productive  of  revenue,  are 
regarded  normally  as  a  direct  charge  upon  the  rates. 
In  these  cases  it  does  not  seem  to  the  Committee  to 
be  necessary  to  prepare  separate  net  revenue  ac- 
counts and  balance-sheets  in  addition  to  the  separate 
revenue  accounts  of  income  and  expenditure. 

"(68)  Any  expense  of  maintaining  a  trading 
undertaking  which  are  not  met  out  of  the  revenue 
of  the  undertaking  must  be  defrayed  forthwith  out  of 
the  fund  or  rate  made  liable  by  statute,  and  pro- 
vision should  accordingly  be  made  by  the  local 
authority  in  their  rates  for   any  such   deficiency  in 

75 


Socialism  in  Local  Government 

the  revenues  of  the  undertaking  being  fully  covered 
by  the  current  rate.  Similarly  any  surplus  revenue 
of  such  an  undertaking,  after  providing  for  prior 
statutory  appropriations  thereof,  should  be  applied 
in  aid  of  the  fund  or  rate  specified,  and  should  be 
consequently  taken  into  consideration  by  the  local 
authority  in  making  the  estimates  for  the  rate.  In 
some  cases  the  provisions  of  existing  local  Acts  may 
not  admit  of  the  accounts  and  estimates  being  dealt 
with  precisely  on  the  lines  here  indicated,  but  we 
are  of  opinion  that  in  all  cases  this  procedure  should 
be  followed  as  closely  as  the  special  enactments  in 
force  will  allow. 

"(70)  The  information  we  have  received  appears 
to  show  that  sufficient  attention  has  not  been  paid  to 
questions  of  this  kind  by  local  authorities.  As  re- 
gards establishment  charges,  for  example,  many 
authorities  seem  to  have  attempted  no  apportion- 
ment between  the  different  departments ;  and  in 
others  there  is  reason  to  suppose  that  the  allocation 
may  have  tended  to  favour  one  fund  at  the  expense 
of  another. 

"  It  is  plain  that  all  these  questions  (and  there  are 
many  others  of  a  similar  character)  have  an  important 
bearing  on  the  accuracy  of  the  statement  of  profit 
and  loss.  It  is  equally  plain  that  they  are  questions 
which  cannot  be  dealt  with  adequately  by  general 
regulations  ;  each  case  must  be  treated  separately 
on  its  own  merits  and  in  accordance  with  the  parti- 
cular circumstances." 

It  is,  therefore,  clear  beyond  dispute  that,  on  the 
whole,   no  reliance  can   be   placed   upon    municipal 

76 


The   Financial  Aspect 

accounts  when  we  wish  to  ascertain  the  true  financial 
results  of  the  trading  undertakings. 

So  far,  we  have  considered  only  the  directly 
financial  effect  of  municipal  enterprise.  There  are, 
however,  other  important  but  indirect  features  to  be 
examined.  Mr.  Robert  Donald,  a  well-known  advo- 
cate of  Municipal  Trading,  in  an  article  in  the 
Economic  Journal  (1899)  upon  the  question  whether 
or  not  municipalities  should  make  profits  on  their 
trading  ventures,  states  that  :— 

"  Some  municipalities  seek  to  accumulate  profits 
in  one  department  to  cover  up  extravagance  in  an- 
other, or  to  keep  the  rates  down.  Profits  may  be 
increased  unnecessarily  for  partisan  purposes.  It 
may  be  considered  expedient  to  keep  the  charges  for 
water  and  gas  high  rather  than  add  a  penny  to  the 
general  rate.  ...  It  is  not  in  the  interest  of  reform 
that  the  ratepayers,  instead  of  feeling  the  full  burden 
of  local  taxation,  pay  a  proportion  of  the  town  re- 
venue through  indirect  channels." 

Therefore,  before  the  claim  can  be  allowed  that 
profits  are  produced  by  municipal  trade,  we  have  to 
place  against  those  alleged  profits,  the  unascertainable 
loss  caused  by  the  extravagance  in  other  departments 
which,  as  Mr.  Donald  admits,  is  the  result  of  muni- 
cipal enterprise. 

Another  phase  of  the  question  is  the  loss  in  rateable 
value  which  often  follows  when  a  town  enters  into 
competition  with  its  commercial  ratepayers.  For 
instance,  in  the  case  of  municipal  tramways  com- 
peting with  railways,  local  authorities  may  suffer  loss 
from  a  reduction  of  the  ratepaying  capacity  of  the 
railways  running  through  their  district.     The  Mayor 

77 


Socialism  in  Local  Government 

of  Wandsworth,  in  a  speech  made  in  October,  1905, 
called  attention  to  this  point. 

"  During  the  past  five  years  railways  in  their  dis- 
trict had  been  assessed  on  a  basis  which  brought 
them  no  less  than  ^^26,000  per  annum.  He  regretted 
to  say  that  these  railways  had  been  able  to  show  a 
very  considerable  depreciation  in  the  profits  upon 
which  they  were  assessed.  This  was  very  remarkable, 
because  they  were  aware  of  the  extension  of  the  area 
occupied  by  railways  in  this  borough,  not  only  in 
regard  to  the  lines  of  railways  themselves,  but  in 
such  developments  as  they  saw  at  Streatham  Com- 
mon. Notwithstanding  all  this  there  was  great  de- 
preciation, and  one  railway  had  shown  conclusively 
that  it  had  been  running  at  a  loss  so  far  as  this 
borough  was  concerned.  There  were  certainly 
some  areas  in  which  considerable  profit  was  shown, 
but  these  were  areas  not  supplied  with  trams,  such 
as  Earlsfield.  They  found,  then,  that  there  was  an 
amazing  decrease  and  an  impending  decrease  through- 
out South  London  ;  a  great  decline  in  those  profits 
on  which  they  could  assess  ;  and  this  ^26,000  to- 
wards the  rates  of  the  borough  was  becoming  a 
diminishing  quantity,  which  might  in  time,  if  things 
went  on  as  they  were  going,  be  wiped  out  entirely. 
It  was  alleged  that  this  was  due  to  tramways,  and 
when  they  turned  to  these  tramways,  seeing  that 
they  had  withdrawn  all  that  which  made  for  profit 
in  regard  to  railways  themselves,  they  would  naturally 
expect  to  find  a  correspondingly  increasing  basis  for 
assessment  in  regard  to  them.  What  do  we  find  ? 
There  is  one  tramway  running  at  so  small  a  profit 
that  the  assessment  on  it  is  only  ^5  per  annum,  and 

78 


The  Financial  Aspect 

the  tendency,  so  far  as  I  can  see,  is  that  these 
municipal  enterprises  are  going  to  be  run  without 
any  of  those  profits  on  which  we  can  levy  assess- 
ment in  any  way  comparable  with  that  which  we 
could  levy  on  any  old-fashioned  joint-stock  railway. 
What  is  the  result?  The  ^^26,000  we  cannot  put 
on  the  back  of  the  tramways.  If  the  tramway 
authorities  choose  to  run  their  trams  on  a  system 
which  allows  of  no  profit  ;  if  they  run  men  up  to 
town  for  a  penny  ;  if  the  ^26,000  becomes  a  charge 
which  we  cannot  recoup  ourselves  from  the  tram- 
ways, where  is  it  ?     On  your  backs  and  mine." 

A  further  indirect  consequence  of  municipal  trade 
which  has  an  important  bearing  upon  the  financial 
aspect,  is  that  the  huge  increase  of  municipal  debt  in 
recent  years  has  undoubtedly  tended  to  increase  the 
rate  of  interest  on  new  loans.  If  that  be  so,  and 
there  is  evidence  to  support  this  view,  then  there  has 
been  created  another  item  to  be  set  against  any 
alleged  profits  from  municipal  trade.  It  is  true  that 
in  the  case  of  the  ventures  themselves,  the  increased 
cost  of  the  loans  will  fall  upon  the  municipal  con- 
cerns. Nevertheless,  the  rate  of  interest  payable  on 
all  other  municipal  loans,  and  they  are  considerable 
in  amount,  will  be  borne  by  the  ratepayers.  To 
quote  one  instance.  Alderman  Wheatley,  in  pre- 
senting the  local  Budget  to  the  Sheffield  City  Council 
in  March  1905,  stated  that  "the  municipal  credit 
being  pledged  for  such  large  amounts  had  had  a 
tendency  to  increase  the  rate  of  interest  at  which 
they  could  borrow,  and,  therefore,  indirectly  to  in- 
crease the  rates.  He  considered  one  quarter  per 
cent,  additional  interest  was  a  very  moderate  estimate 

79 


Socialism  in  Local  Government 

of  what  this  large  borrowing  was  costing  the  city, 
and,  therefore,  the  rates  were  suffering  in  Sheffield 
to  the  extent  of  something  like  ;^5ooo  per  annum. 
The  large  amounts  borrowed  by  various  authorities 
for  trading  undertakings  had  increased  the  rate  of 
interest  at  which  money  could  be  borrowed  for 
improvements  and  non-trading  works."  ^ 

This  unseen  factor  in  the  situation  tells  heavily 
against  any  "  net  profits  "  appearing  in  the  Returns. 

In  estimating  the  gains  or  losses  to  the  ratepayers, 
there  should  also  be  taken  into  consideration  the 
rents  which  private  companies  or  individuals  would 
have  paid  to  the  town  for  the  privilege  of  managing 
the  undertakings  now  in  municipal  hands.  There  is 
no  means  of  ascertaining  the  total  annual  sum  which 
the  local  authorities  in  the  United  Kingdom  might 
have  derived  from  this  source.  In  some  respects, 
however,  we  can  make  a  rough  estimate.  Taking 
the  municipal  tramways  leased  to  companies,  as 
given  in  the  Return  of  1903,  we  find  that  they  show 
an  average  annual  net  profit  of  -^17,414.  And 
Major  Darwin  ^  has  pointed  out  that  the  tramways 
worked  by  municipalities  with  a  capital  of  ;£8,6io,q73 
would  have  brought  in  over  ^105,000  a  year  to*he 
towns  if  they  had  been  leased  out  to  private  com- 
panies. In  other  words,  leasing  would  have  produced 
some  ;^2 3,000  more  than  was  actually  gained  by 
municipal  management.  Inasmuch  as  the  leased 
lines  were  in  the  least  populous  districts  it  is  safe 
to  say  that  Major  Darwin's  estimate  is  well  under 
the  mark.     On   a  capital   expenditure  of  about  one 

^  Sheffield  Telegraph,  March  23,  1905. 
*  Municipal  Trade,  p.  236. 
80 


The   Financial  Aspect 

million  pounds  in  connection  with  the  leased  tram 
lines  in  North  London  the  London  County  Council 
secured  a  net  profit  of  over  ^31,000  a  year.  There 
can  be  no  doubt  that,  given  the  will,  a  perfectly 
sound  policy  of  leasing  could  be  established  which 
would  secure  far  larger  net  profits  to  the  munici- 
palities than  is  produced  under  municipal  manage- 
ment, and  which  would  entail  no  sacrifice  of  any 
present  advantages  in  regard  to  service  and  price,^ 

hi  the  admirable  analysis  of  some  British  Gas 
undertakings,  which  is  contained  in  the  Report  of 
Mr.  C.  L.  Edgar  and  Mr.  Walton  Clark  to  the 
American  National  Civic  F'ederation,  it  is  proved 
that  the  consumer  using  a  municipal  gas  service 
does  not  enjoy  a  better  service  than  is  given  by 
private  companies.  Dealing  with  the  fact  that  some 
municipal  gas  undertakings  pay  over  profits  to  the 
rates,  the  Report  examines  the  effect  upon  the 
consumer  if  companies'  prices  had  prevailed.  The 
comparison  relates  to  1905,  and  to  the  municipal 
and  private  concerns  selected  by  the  American  Civic 
Commission  for  investigation."-^ 


Table  showing  Saving  to  Gas  Conswrters 


Municipal  Gas. 

If  Newcastle 

Company's 

prices  had 

been  Charged. 

If  Sheffield 

Company's 

Prices  had 

been  Charged. 

Contributed 
to  Rates. 

Birmingham      .     .     . 
Manchester  .... 
Leicester 

£ 

142,585 

140,955 
56,631 

£ 
216,455 

195,913 
78,439 

£ 
68,813 
60,000 
43,466 

^  See  Chapter  on  "  An  Alternative  Policy." 

81 


Part  i.  vol.  i.  p.  344. 
F 


Socialism  in  Local  Government 

Thus,  it  appears  that,  in  spite  of  the  "  profits  "  to 
rates,  if  Birmingham,  Manchester,  and  Leicester  had 
been  served  by  the  private  companies  of  Newcastle 
and  Sheffield,  they  would  have  derived  a  larger 
financial  benefit. 

We  have  now  obtained  a  general  idea  of  the 
financial  aspects  of  municipal  trading.  They  may 
be  summed  up  briefly  : — 

1.  That    no    complete    Return    of    the    financial 

results  is  available. 

2.  That   such    incomplete   Returns   as    have   been 

published  at  various  times,  when  analysed, 
show  that  no  profits  have  really  been  made, 
but  that,  on  the  whole,  losses  have  been 
incurred. 

3.  That     the     accounts     of     local    authorities,    in 

regard  to  their  reproductive  undertakings,  do 
not  comprise  some  important  items  of  ex- 
penditure made  on  behalf  of  those  under- 
takings. 

4.  That    there   are   indirect    financial    effects    due 

to  municipal  trading  which  add  to  the  ordi- 
nary civic  expenditure,  and  also  operate  to 
decrease  the  income  from  rates. 

5.  That   by    an    efficient    system   of    franchises    a 

far  greater  financial  gain  than  any  claimed 
by  municipal  traders  would  accrue  to  the 
ratepayers. 


82 


VII 
PRICE  AND  QUALITY  OF  SERVICE 

It  is  the  stock  argument  of  Administrative  Socialists 
that  a  municipahty  does  not  aim  at  making  a  profit, 
though,  as  we  have  seen,  that  has  been  the  principal 
reason  addressed  to  the  public  ear  why  municipal 
trading  should  be  undertaken.  What  the  munici- 
pality has  in  view,  says  the  Socialist,  is  the  supply  of 
public  needs  as  cheaply  and  effectively  as  possible. 
The  aim  of  private  enterprise,  on  the  other  hand,  is 
the  opposite  to  this  ;  its  ideal  is,  a  maximum  of 
profit.  "  Under  municipal  management  the  services 
are  cheaper  and  more  efficient  than  under  private 
enterprise."  ^  Even  if  there  be  losses  upon  muni- 
cipal trading,  the  benefit  of  cheapness  and  better 
quality  are  ample  compensation.  Such,  in  brief,  is 
the  contention  of  the  advocates  of  municipal  enter- 
prise. 

It  is  true  that  considerable  difference  of  opinion 
exists  in  the  ranks  of  Municipal  Traders  as  to  whether 
or  not  a  municipality  ought  to  make  a  profit,  or 
reduce  its  prices  and  give  a  superior  service.  The 
real  advantage  of  public  enterprise  lies,  according  to 
Mr.  G.  Bernard  Shaw,  not  in  the  complete  reduction 

^  Suthcrs,  Alind  Your  Own  Business. 
83 


Socialism  in  Local  Government 

of  price  to  cost,  but  in  the  application  of  the  profits 
to  the  pubhc  good.  Mr.  E.  Cannan  holds  the  same 
view.  He  takes  the  ground  that  "  if  municipalities 
are  precluded  from  making  any  gain  for  the  general 
body  of  ratepayers  by  municipal  enterprise,  while 
they  are  not  precluded  or  protected  from  making  a 
loss  which  the  general  body  will  have  to  make  up,  it 
is  tolerably  clear  that  the  ratepayer  qua  ratepayer  will 
always  (as  he  often  is  at  present)  be  opposed  to  the 
undertaking  of  any  municipal  enterprise.  He  cannot 
qua  ratepayer  gain  by  it,  and  he  may  (indeed  must, 
unless  great  reserves  are  formed  to  make  good  years 
balance  bad)  lose  by  it,"  ^  He  further  suggests  that 
the  rule  that  the  profit  must  promptly  be  got  rid  of,  is 
likely  to  lead  to  extravagant  mismanagement.  Work- 
ing expenses  will  be  increased,  and  only  a  small  share 
go  in  reduction  of  prices.  A  third  argument  adduced 
by  Mr.  Cannan  is,  that  it  is  not  desirable  for  the  com- 
munity to  use  its  credit  to  cheapen  just  the  particular 
things  which  happen  to  come  conveniently  within  the 
domain  of  municipal  enterprise.  What  particular 
claim,  he  asks,  have  the  consumers  of  gas  or  electric 
light,  or  it  may  be,  the  users  of  telephones,  to  have 
their  pockets  relieved  at  the  risk  always,  and  every 
now  and  then  at  the  actual  cost,  of  the  whole  body 
of  ratepayers  ?  Consumers  of  oil  may  be  both  a 
more  necessitous  and  a  more  deserving  body  of 
persons.  The  demand  that  the  risk  and  loss 
should  be  taken  in  the  production  of  certain  com- 
modities while  all  gain  should  be  foregone,  obviously 
amounts  to  a  bounty  on  the  production  of  those 
particular  commodities,  and  bounties,  we  have  very 

^  Economic  Journal,  1899,  p.  6. 
84 


Price  and  Quality  of  Service 

properly  been  taught  to  believe,  are  uneconomic  in 
their  operation. 

On  the  other  side,  Mr.  Robert  Donald  has  argued, 
in  reply  to  Mr.  Cannan,  that  profit-making  is  not 
sound  municipal  policy,  but  that  cheapness  and 
quality  of  service  ought  to  be  paramount  considera- 
tions. 

Now,  this  divergence  of  opinion  is  important,  be- 
cause it  throws  some  light  upon  the  point  we  have 
now  to  examine — Whether  private  or  municipal 
enterprise  gives  a  better  and  a  cheaper  service. 

If,  as  we  have  good  reason  to  believe  from  our 
investigation  of  municipal  finance,  there  are  not  now, 
and  never  have  been,  any  real  profits,  the  cause  must 
either  be  bad  management,  which  has  eaten  up  the 
profits  usually  made  by  private  enterprise,  or  a  re- 
duction in  price,  and  possibly  an  improved  service. 
But  the  arguments  used  in  the  controversy  about 
"profits"  or  "  no  profits"  tend  to  show  that  it  is  the 
general  practice  of  municipalities  to  aim  at  profit- 
making,  and  not  at  offering  a  better  and  cheaper 
service.  The  general  experience,  too,  of  those  en- 
gaged in  administration  is  that  profit  is  the  main 
object  in  view.  It  was,  indeed,  the  argument  used 
to  persuade  the  towns  to  indulge  in  municipalisation. 
Therefore,  broadly  speaking,  we  may  infer  from  the 
discussion  that  as  profit  is  the  chief  idea  of  municipal 
trade,  there  can  be  no  substantial  difference  between 
the  cost  or  quality  of  private  and  municipal  enter- 
prise. 

What  is  the  relative  standard  of  prices  in  private 
and  municipal  trade,  is  difficult  to  ascertain  by  any 
direct  comparison. 

85 


Socialism  in  Local  Government 

In  the  first  place,  to  the  prices  charged  by  munici- 
paHties  should  be  added  the  losses  borne  by  the  rate- 
payers in  various  directions  indicated  in  the  previous 
chapter.  A  precise  calculation  is  not  possible  until 
further  information  is  forthcoming. 

In  the  second  place,  any  comparison  between  the 
charges  of  municipalities  now  and  the  charges  made 
by  superseded  companies  in  the  past  is  obviously 
unfair,  as  it  takes  no  account  of  the  development 
of  science  and  industrial  methods.  Comparison 
must  be  based  on  present  charges  by  both  kinds 
of  enterprise.  And  here  we  are  faced  by  an  almost 
insuperable  difficulty.  For,  to  be  just,  a  comparative 
estimate  must  deal  with  concerns  in  equal  local 
circumstances.  For  instance,  a  gas  company  de- 
pends on  cheap  coal  for  a  low  cost  of  production, 
and  any  attempt  to  match  the  prices  of  a  company 
near  a  coalfield  with  a  town-undertaking  some  hun- 
dreds of  miles  away  from  a  coal  district,  would  be 
unfair  to  the  town.  Again,  density  of  population  is 
another  factor  ;  for  the  greater  the  consumption,  the 
cheaper  may  be  the  cost  of  production,  and  hence 
a  low  price  and  a  better  quality  is  given  to  the 
consumer. 

Further,  it  should  be  borne  in  mind  that  the 
districts  served  by  local  authorities  are  usually  the 
most  populous  and,  therefore,  the  most  remunera- 
tive. Municipalities,  as  a  rule,  have  taken  possession 
of  the  most  profitable  areas  of  trading,  and  have  left 
the  least  successful  to  private  undertakings. 

As  an  illustration  of  unjust  comparison,  take  the 
case  of  the  London  United  Tramways  Company  and 
the    London    County    Council    Southern    Tramways. 

86 


Price  and  Quality  of  Service 

These  two  concerns  are  often  set  in  opposition  by 
municipal  traders,  who  thus  seek  to  prove  the  superi- 
ority of  municipal  management.  The  Company's 
lines  are  situate  mainly  in  the  rural  and  semi-suburban 
districts  around  the  west  and  south-west  of  London. 
They  are  building  up  their  business,  and  waiting  for 
a  huge  population  to  gather  in  their  area  of  supply. 
On  the  other  hand,  the  London  County  Council  hold 
the  richest  tramway  routes  in  the  world.  They 
entered  into  possession  of  a  well-established  and  pro- 
fitable business.  They  cater  for  the  vast  multitudes 
who  daily  travel  to  and  fro  between  outer  and  central 
London.  On  the  ground  of  different  local  conditions 
alone,  any  attempt  to  challenge  comparison  between 
the  two  systems  is  obviously  unsound,  and  monstrously 
unfair  to  the  Company. 

A  further  disturbing  factor,  in  the  case  of  electrical 
and  gas  concerns,  is  that,  on  the  whole,  companies 
do  not  enjoy  the  advantage  of  supplying  public 
lighting  to  so  large  an  extent  as  municipal  autho- 
rities. The  combination  of  street  lighting  with 
commercial  electric  supply  secures  economy  in 
production. 

Bearing  these  important  points  in  mind,  we  will 
endeavour,  as  an  experiment,  to  frame  a  few  com- 
parisons. 

Gas. — In  his  evidence  before  the  Committee  upon 
Municipal  Trading,  the  late  Sir  Courtenay  Boyle, 
who  was  then  Permanent  Secretary  to  the  Board 
of  Trade,  stated  that  while  the  figures  indicated  that 
generally  the  price  charged  to  consumers  was  higher 
in  the  case  of  companies  than  local  authorities,  the 
districts  served  by  the  latter  were  the  most  populous, 

87 


Socialism   in  Local  Government 

and  therefore  the  most  remunerative.  "  On  the 
whole,  the  returns  do  not  suggest  that,  in  hke  cir- 
cumstances, there  is  any  great  balance  of  advantage 
to  the  consumer  as  regards  the  price  charged  in 
being  supplied  by  a  local  authority  instead  of  by 
a  company." 

In  the  course  of  his  Presidental  address  at  the 
Annual  Meeting  of  the  Institution  of  Gas  Engineers 
in  June  1906,  Mr.  Charles  Wood,  the  Manager  of 
the  Bradford  Municipal  Gas  Works,  said  : — 

"  The  large  majority  of  gas  works  owned  by  local 
authorities  were  in  the  North  and  Midlands,  and 
principally  in  the  manufacturing  districts,  where  they 
had  many  advantages.  On  the  other  hand,  the  com- 
panies predominate  in  the  South.  It  is  interesting 
to  note  that  there  were  two  counties  in  the  South 
of  England  in  which  105  gas  companies  were  estab- 
lished, but  where  there  was  not  a  single  gas  under- 
taking owned  by  a  local  authority.  It  would, 
therefore,  appear  that  the  geographical  advantages 
of  the  majority  of  gas  undertakings  belonging  to 
local  authorities  might  account  very  largely  for  the 
comparatively  successful  results  which  they  were  able 
to  show,  in  spite  of  the  obstacles  to  their  progress 
due  to  mistaken  methods  of  administration."  ^ 

The  following  table  extracted  from  Fields'  Gas 
Analysis  of  the  principal  gas  undertakings  in  the 
United  Kingdom  for  the  year  1906,  proves  that 
the  companies  (allowing  for  proximity  to  coalfields) 
show  more  favourable  figures  as  to  price  and  quality 
of  service.  The  figures  are  average  price  charged 
to  public  and  private  consumers. 

^  Morning  Post,  June  20,  1906. 
88 


Price  and  Quality  of  Service 


Town. 

Municipal  or 
Company. 

Average 
Price  per 
looo  Feet. 

Candle  * 
Power. 

London — 

Commercial      .     .     . 

South  Metropolitan  . 

Wandsworth    .     .     . 

Sheffield 

Newcastle 

Plymouth 

Bradford 

Bristol 

Bath 

Birmingham   .... 

Oldham 

Salford 

Carlisle 

Manchester    .... 

Leicester 

Derby 

Rochester,  &c.  .  .  . 
Nottingham    .... 

Portsea 

Bolton 

Brighton 

Company 
» 

Municipal 
Company 

Municipal 
)) 
jy 
)> 
j> 
)> 

Company 

Municipal 
Company 
Municipal 
Company 

d. 
28.11 

23-59 
23.96 
16.27 
20.63 
20.85 

23-44 
23.48 
24.38 
24.40 
25.14 

27 

27.56 
27.72 
28.19 

29-73 
29.80 

29.90 

30.68 

31.26 

34-13 

15 
16.10 

14.70 

17-37 

16.10 

14.50 

17.50 

15.96 

16 

16.10 

18.77 

1945 
19.50 

15-30 

14.21 

16.29 

1 5.68 

16 

14.20 

18.27 

15.52 

Excluding    the    London    Companies,   the   average 
was : — 


Companies 
Municipalities 


23.i7d.  per  1000  feet  sold. 
26.48d.         „  „ 


which  shows  that  the  Companies  average  charge  was 
over  3id.  per  1000  cubic  feet  lower  than  the  charge 
of  the  municipal  gas  works.  And  that  in  spite  of 
the  fact  that  upon  the  whole  the  municipal  concerns 
were  in  closer  proximity  to  the  coalfields  than  those 
of  the  companies. 

Now   turn    to    the   cost   of   public  lighting.     The 

89 


Socialism  in  Local  Government 

following  table  is  compiled  from  Parliamentary  Re- 
turns, Nos.  393  and  394,  of  1906: — 


Town. 

Municipal  or 
Company. 

Price. 

Remarks. 

Candle 
Power. 

£ 

s. 

d. 

Birmingham  .     .     . 

Municipal 

0 

I 

0 

Discount  5% 

16.32 

Sheffield    .... 

Company 

0 

I 

2 

17-37 

Newcastle      .     .     . 

>) 

0 

0 

to 

0 

15^%       discount 
and  2|%  addi- 

16.20 

0 

3 

5 

tional  if  lamps 
lit  all  the  year 

Northampton     .     . 

V 

0 

I 

II 

Discount  10% 

17.50 

Bristol  

!) 

0 

I 

9 

15.29 

Bath 

)) 

0 

I 

II 

16 

South  Metropolitan 

>} 

0 

2 

0 

Discount  5% 

14.5 

(London) 

Darlington     .     .     . 

Municipal 

0 

2 

0 

16.03 

Hartlepool     .     .     . 

Company 

0 

2 

2 

Discount  10% 

15.85 

Tottenham     .     .     . 

a 

0 

•-> 

I 

Discount  4% 

15-74 

Glasgow    .... 

Municipal 

0 

2 

I 

20.25 

Derby 

Company 

0 

2 

I 

15.50 

Halifax      .... 

Municipal 

0 

0 

'I 

Discount  8J%  to 
I7i%     accord- 
ing    to     con- 
sumption 

17.51 

Gas  Light  Company 

Company 

0 

n 

2 

16.48 

(London) 

Wandsworth .     .     . 

)) 

0 

2 

2 

15.50 

Nottingham  .     .     . 

Municipal 

0 

2 

2 

15.86 

Leeds    

!J 

0 

2 

^ 
J 

Discount  2h'X  to 
5% 

18.2 

Scarborough .     .     . 

Company 

0 

2 

I2 

15.88 

Cheltenham  .     .     . 

}f 

0 

2 

4 

Discount  5% 

15-77 

Salford 

Municipal 

0 

2 

3 

19.45 

Maidstone      .     .     . 

Company 

0 

2 

4 

14.50 

Blackpool .... 

Municipal 

0 

2 

4 

18 

Commercial    (Lon- 

Company 

0 

2 

4 

14.9 

don) 

Liverpool  .... 

jj 

0 

2 

6 

10%  discount 

20.70 

Ipswich      .... 

>) 

0 

2 

6 

5%  discount 

15.20 

Birkenhead    .     .     . 

Municipal 

0 

2 

6 

5%  discount 

19.5 

90 


Price  and  Quality   of  Service 


Town. 

Municipal  or 

Price 

Remarks. 

Candle 

Company. 

Power. 

/: 

s. 

d. 

Manchester   .     .     . 

Municipal 

o 

2 

.3 

15-30 

Middlesbrough  .     . 

}t 

o 

2 

4 

15.50 

Dundee      .... 

jj 

o 

2 

4 

20 

Bolton 

» 

o 

2 

9 

Discount  3d. 

18.27 

Pi 

ice  per 

Lamp. 

Macclesfield  .     .     . 

j> 

I 

9 

4 

18 

Huddersfield      .     . 

>> 

I 

1.3 

0 

15 

Cardiff 

Company 

I 

19 

2 

16.65 

Hornsev     .... 

J) 

2 

2 

0 

15.99 

Sunderland    .     .     . 

j> 

2 

9 

0 

Including    light- 
ing,   cleaning, 
and     extingui- 
shing 

15.50 

Burnley     .... 

Municipal 

o 

lO 

0 

Lighting,    clean- 
ing, and  repairs 

17.76 

South  Shields     .     . 

Company 

2 

12 

0 

Lighting,    clean- 
ing, and  extin- 
guishing 

14.98 

Chester      .... 

» 

2 

14 

6 

Lighting,    clean- 
ing, and  main- 
tenance 

16 

Stockport  .... 

Municipal 

2 

15 

3 

Lighting,    clean- 
ing, and  main- 
tenance 

18 

Commercial    (Lon- 

Company 

2 

9 

0 

14.9 

don) 

to 
9 

0 

Hull 

>) 

2 

15 

0 

15-63 

Walsall      .... 

Municipal 

2 

15 

0 

15.5 

The  above  comparison  is  particularly  interesting, 
because,  excepting  water,  the  supply  of  gas  is  the 
only  kind  of  manufacturing  undertaking  in  which 
private  enterprise  enjoys  an  unlimited  franchise. 
That  is  to  say,  the  gas  company  is  not  usually 
subject  to  purchase   by    the   town   after    a   term    of 

91 


Socialism  in  Local  Government 

years,  like  electricity  and  tramway  concerns.  It  is, 
therefore,  important  to  note  that  with  equal  oppor- 
tunity, private  gas  companies'  charges  are  lower  than 
those  of  municipalities. 

Electricity. — As  to  Electric  Light  undertakings,  a 
Return  presented  to  the  House  of  Commons  in 
January,  1908,  gave  the  average  price  per  unit 
charged  by  local  authorities  and  companies  in  the 
Metropolitan  Police  District,  for  Power  and  Heating, 
Private  Lighting  and  Public  Lighting  : — 


Power  and 
Heating. 

Private 
Lighting. 

Public 
Lighting. 

Local  Authorities     . 
Companies      .     .     . 

d. 

1. 301 
1.450 

d. 
3-677 
3-833 

d. 
1.850 
1.620 

A  prominent  feature  of  this  Return  is  the  small 
amount  of  public  lighting  done  by  companies.  As 
we  have  observed,  the  price  of  electricity  depends 
largely  on  the  extent  to  which  the  undertaking 
supplies  street  lighting,  and  we  may  assume  that  this 
fact  accounts  for  the  small  difference  in  average 
prices  shown  by  the  Return.  The  table  shows  that 
while  the  companies  supplied  for  public  lighting  only 
4,377,875  units  out  of  a  total  of  125,379,278  units 
delivered,  the  local  authorities  supplied  16,578,716 
units  for  public  lighting  out  of  a  total  of  87,795,001 
units  delivered.  It  may  be  added  that  many  of  the 
Metropolitan  municipal  undertakings  show  heavy 
deficits  each  year.  Due  allowance  must  also  be 
made  for  the  fact  that  companies  have  only  a  limited 

92 


Price  and  Quality  of  Service 

franchise,    while    municipalities     have     a     perpetual 
franchise. 

The  latest  development  of  private  enterprise  (bulk 
supply  companies)  provides  electricity  at  lower  rates 
than  the  local  authorities. 

Tramways. — Any  extensive  and  fair  comparison  of 
the  fares  and  service  of  companies  as  compared  with 
municipalities  is  not  possible.  The  fact  that  tram 
companies  only  enjoy  a  limited  life  while  munici- 
palities have  an  unlimited  franchise  places  the  former 
at  a  considerable  disadvantage.  With  only  a  life  of 
twenty-one  years  before  it,  a  Company  has  to  build 
up  its  business  quickly  and  make  a  profitable  return 
in  a  limited  number  of  years  to  cover  its  initial 
expenditure  and  losses.  It  is,  therefore,  forced 
by  these  circumstances  to  charge  higher  fares 
than  it  would  do  if  it  had  a  perpetual  concession. 
Moreover,  municipalities,  as  a  rule,  took  over 
the  most  successful  private  tramway  systems  when 
they  had  reached  a  profitable  stage  after  a  hard 
struggle. 

Nevertheless,  in  spite  of  these  disadvantages,  it  is 
doubtful  whether  private  companies  charge  a  higher 
price  than  municipalities,  when  the  local  conditions 
are  equal.  Taking  the  following  towns,  in  which 
the  advantage  of  situation,  density  of  population, 
&c.,  are  all  on  the  side  of  the  municipal  concerns, 
and  making  allowance  for  those  facts,  there  is  no 
essential  difference  either  in  service  or  fares  and 
distance.  Halfpenny  fares  are  omitted,  as  only  three 
municipalities  and  no  companies  give  them.  The 
average  distance  of  the  halfpenny  fare  is  about  two- 
thirds  of  a  mile. 

93 


Socialism  in  Local  Government 


Municipal — 

Glasgow 

Manchester 

Liverpool    

London  County  Council  ^ 
Companies — 

London  United — 
Middlesex  and  London 

Surrey 

Norwich 

Dublin  1 


xd. 


Miles. 


2.IO 
2.40 
1.85 


2.07 
1.84 
1.46 
1.50 


zd. 


Miles. 

4-59 
3-34 
4.38 
4.05 


4.17 
3-70 

3-0 


3d. 


Miles. 
6.90 
4.68 

6.66 
5.98 


6.18 
5.42 

4.50 


4(f. 


Miles. 
9.19 
6.45 
8.54 


8.80 
7.21 


Sd. 


Miles. 
10.77 

10.43 


10.16 
8.90 


6d. 


Miles. 
12.93 


II. 16 


Generally,  to  summarise  the  facts,  it  will  be  found 
that  when  the  whole  field  is  surveyed,  any  com- 
parison of  average  prices  is  likely  to  show  that 
public  authorities  charge  less  than  private  com- 
panies. The  information  available,  however,  is 
wholly  insufficient  to  enable  a  sound  opinion  to  be 
formed  on  the  point.  Assuming  that  authoritative 
and  complete  statistics  could  be  compiled,  any 
attempt  to  match  the  two  forms  of  enterprise  would 
be  rendered  useless  by  the  factors  we  have  already 
discussed,  viz : — 

{a)  That  municipalities  have  occupied  the  richest 
fields  of  trade,  and  ought  to  be  able  to  afford 
to  charge  low  prices,  while  private  traders 
have  been  left  in  possession  of  poor  areas  of 
trade,  and  in  many  cases  are  the  pioneers  in 
new  and,  at  present,  unremunerative  districts. 
{b)  Municipalities  can  favour  their  own  under- 
takings by  high  charges — for  street  lighting, 
for  instance. 


'  Approximate  figures. 
94 


Price  and  Quality  of  Service 

(c)  The  limited  concessions  to  companies  operate 

to  prevent  the  introduction  of  costly  improve- 
ments which  would  tend  to  lower  prices.  A 
notable  example  of  this  is  the  transition  from 
horse  to  electric  traction  on  tramways. 

(d)  To     the     prices     charged     by     municipalities 

should  be  added  the  losses  incurred  on  the 
undertakings,  for  this  has  to  be  borne  by  the 
consumer  in  the  rates  which  he  pays  either 
directly  or  indirectly. 
With  respect  to  the  quality  of  the  service,  on  the 
whole  such  information  as  is  available  goes  to  prove 
that  the  difference  between  private  and  municipal 
enterprise  is  in  favour  of  the  former.  At  present, 
many  of  the  municipalities  are  reaping  the  benefits 
of  the  experience  of  the  companies  they  have  super- 
seded. Private  enterprise  is  responsible  for  every 
fresh  advance  in  methods  and  economy  of  pro- 
duction, and  the  municipalities  profit  by  this  essential 
element  of  successful  industry.  The  rivalry  between 
the  two  forms  of  enterprise  naturally  spurs  the  muni- 
cipalities to  greater  efforts  to  show  at  least  as  good 
a  record  as  their  competitors.  It  is  too  probable, 
however,  that  when  this  stimulus  has  been  removed 
by  the  extinction  of  private  enterprise  in  gas,  elec- 
tricity, tramways,  and  other  concerns,  the  municipal 
departments  will  lapse  into  stagnation  and  inefficiency, 
and  that  all  the  inherent  vices  of  central  governmental 
departments  will  be  repeated. 


95 


VIII 

PUBLIC    VERSUS   PRIVATE 
ENTERPRISE 

So  far  we  have  endeavoured  to  test  the  relative 
capacities  of  private  and  municipal  trade  by  an 
investigation  of  the  financial  results.  Notwithstand- 
ing the  paucity  of  accurate  information,  it  is  clear 
that  municipalities  cannot  trade  with  such  monetary 
success  as  private  business  men  ;  nor  do  they  furnish 
proof  of  a  better  service  and  a  lower  price  under 
equal  conditions. 

There  are,  however,  wider  and  more  general 
reasons  which  go  to  show  that  public  enterprise  is 
not  so  efficient  as  private  effort. 

It  has  been  well  said  that  the  admitted  functions 
of  government  cover  a  far  wider  field  than  can  easily 
be  included  within  the  ring  fence  of  any  restrictive 
definition,  and  that  it  is  hardly  possible  to  find  any 
ground  of  justification  common  to  them  all,  ex- 
cept the  comprehensive  one  of  general  expediency. 
Nevertheless,  the  duties  of  government,  whether 
central  or  local,  have  usually  been  divided  into  two 
classes  :  (i)  necessary  or  compulsory  ;  (2)  optional. 
Within  the  latter  category  falls  the  disputed  right  of 
government  to  trade. 

96 


Public  versus  Private  Enterprise 

A  strict  interpretation  of  the  term  "  Government " 
would  exclude  trading.  Indeed,  it  is  noteworthy 
that  no  real  answer  has  been  given  to  the  contention 
advanced  by  opponents  of  municipal  trading  that  it 
is  against  all  the  canons  of  sound  government  for 
any  body  of  men  to  engage  in  a  trade  and  at  the 
same  time  to  be  entrusted  with  the  administration  of 
laws  designed  for  the  protection  of  the  public  and 
regulative  of  that  trade.  As  the  State,  through  its 
central  or  local  authorities,  interferes  more  and  more 
every  year  with  the  operations  of  commerce,  this 
anomaly  becomes  a  source  of  serious  danger  to  the 
welfare  of  the  community.  It  is  useless  for  muni- 
cipal traders  to  contend  that  the  laws  in  question 
are  necessary  only  in  the  case  of  private  and  not 
municipal  trade.  For,  as  we  know,  the  motives  and 
the  fallibility  of  men  are  the  same  in  both  cases. 
The  municipalities  are  out  to  make  **  profits  "  ;  so 
are  the  companies.  The  directors  of  both  are  human 
and  liable  to  err.  In  fact,  the  interest  and  the  re- 
sponsibility of  the  municipal  councillor  is  less  than 
that  of  the  company  director,  and  the  municipal 
undertaking  is,  therefore,  more  likely  to  offend 
against  the  laws.  The  municipal  gas  department  is 
not  so  rigidly  inspected  by  the  municipal  inspector 
as  is  the  private  company.  The  bye-law  against 
overcrowding  of  tram-cars  is  frequently  a  dead 
letter  where  municipal  tramways  are  concerned.  It 
is  not  likely  that  the  municipality  will  prosecute  its 
own  electrical  works  for  committing  a  smoke  nuis- 
ance. A  municipality  has  even  been  known  to 
secure  powers  from  Parliament  to  protect  it  from 
the  general  law  relating  to  nuisances.     And  when  it 

97  G 


Socialism  in  Local  Government 

becomes  a  question  of  permitting  electric  or  motor 
buses  to  cater  for  the  passenger  traffic  of  a  borough, 
the  municipaHty  refuses  consent  in  order  to  protect 
its  tramways  from  competition.  Therefore,  no  dis- 
tinction of  treatment,  so  far  as  the  law  is  concerned, 
can  be  admitted.  The  regulation  of  private  trading 
by  local  government  becomes  a  farce  when  the  local 
authority  becomes  both  trader  and  administrator  too. 
The  municipal  councillor,  as  the  depository  of  power, 
though  representative  of  a  majority  of  the  people,  is 
quite  as  likely  to  encroach  on  the  rights  of  the 
people  when  he  is  running  a  municipal  trading 
concern  as  is  any  company  director. 

In  addition  to  this  objection,  there  are  others 
equally  important.  It  is  not  to  be  disputed  that 
every  additional  trading  function  administered  by  a 
local  authority,  particularly  in  the  great  provincial 
towns,  is  a  fresh  burden  upon  a  body  already  over- 
whelmed with  work.  The  whole  trend  of  legislation 
is  increasingly  towards  devolution  to  local  government 
of  many  important  matters  hitherto  administered 
centrally.  In  the  past  twenty  years,  innumerable 
Acts  of  Parliament  have  placed  new  responsibilities 
upon  local  authorities.  Further,  there  has  been  a 
formidable  movement  towards  the  reduction  of  what 
a  President  of  the  Local  Government  Board  has 
described  as  "  a  chaos  as  regards  authorities,  a  chaos 
as  regards  rates,  and  a  worse  chaos  than  all  as 
regards  areas  of  taxation."  This  tendency  to  con- 
centrate all  local  administration  in  one  body  is  seen 
in  the  abolition  of  the  old  School  Boards,  and  the 
placing  of  Educational  duties  upon  the  shoulders  of 
the  Municipal  Authorities.     Desirable  though  it  may 

98 


Public  versus  Private  Enterprise 

be  to  secure  uniformity  and  simplicity  in  local  affairs, 
the  inevitable  effect  of  overloading  local  bodies  with 
work  is  to  discourage  the  ablest  men  from  taking 
part  in  civic  affairs.  The  ability  to  organise,  the 
capability  to  master  intricate  problems,  and  to  form 
broad  judgments,  so  valuable  in  commercial  life, 
have  hitherto  been  largely  at  the  disposal  of  munici- 
palities. It  has  been  the  glory  of  British  Local 
Government  that  it  has  had  the  advantage  of  the 
services  of  the  leading  business  men  in  the  great 
cities.  Now,  there  are  signs  of  decay  in  the  personnel 
of  our  IMunicipal  Councils.  It  is  becoming  difficult 
to  induce  the  principal  business  men  to  enter  civic 
life.  The  duties  of  a  councillor  are  so  onerous  and 
demand  so  much  time  that  it  is  not  possible  for  them 
to  successfully  undertake  both  public  and  private 
work. 

The  Lord  Mayor  of  Birkenhead  has  stated  that, 
"  they  found  that  men  of  ability  and  experience, 
whose  services  would  be  very- useful  to  the  town, 
were  not  prepared  to  give  that  service  for  the 
public  good."  On  the  same  occasion,  Alderman 
Maxwell,  of  Liverpool,  complained  that  "  very  great 
apathy  was  shown  in  connection  with  the  municipal 
affairs  to  the  great  detriment  of  the  City."  Coun- 
cillor D.  Boyle,  of  Manchester,  stated  in  a  lecture 
delivered  at  Ancoats  in  February,  1906,  that  "he 
thought  the  City  Council  as  a  whole  was  undoubtedly 
degenerating,  and  he  often  wondered  when  the  lead- 
ing spirits  were  no  longer  in  their  places  what  would 
become  of  the  Council,  for  nobody  seemed  to  be 
rising  up  to  take  their  places.  The  best  men  were 
not  going  into   the    Council.     The  personnel  of    the 

99 


Socialism  in  Local  Government 

members  was  not  of  that  high  character  and  wide 
experience  that  it  was  years  ago.  It  was  a  question 
for  the  ratepayers  of  a  great  community  Hke  Man- 
chester to  see  that  their  civic  council  was  not 
brought  down  to  a  mere  pettifogging  level." 

This  deterioration  in  the  character  and  ability  of 
municipal  councillors  affects  not  merely  the  conduct 
of  municipal  undertakings,  but  all  the  other  branches 
of  local  administration.  The  loss  occasioned  by  it 
cannot  be  measured  in  money.  The  abstention  of 
the  chief  citizens  from  taking  part  in  civic  affairs 
opens  the  door  to  maladministration  and  corruption. 
The  Council  Chamber  is  occupied  by  men  of  small 
capacity  and  narrow  minds,  and  by  men  with  axes 
to  grind.  A  natural  consequence  of  overburdening 
Local  Government,  then,  is  that  many  things  are 
bungled,  others  not  done  at  all,  and  officialism  be- 
comes rampant. 

The  two  reasons  which  we  have  just  considered 
tell  powerfully  against  municipal  trade.  To  them 
may  be  added  the  arguments  advanced  by  Mr.  J.  S. 
Mill,  in  his  consideration  of  the  limits  of  the  province 
of  government  ;  "  the  danger  of  unnecessarily  swell- 
ing the  direct  power  and  indirect  influence  of  govern- 
ment, and  multiplying  occasions  of  collision  between 
its  agents  and  private  citizens  ;  and  of  the  inexpe- 
diency of  concentrating  in  a  dominant  bureaucracy, 
all  the  skill  and  experience  in  the  management  of 
large  interests,  and  all  the  power  of  organised  action, 
existing  in  the  community  ;  a  practice  which  keeps 
the  citizens  in  a  relation  to  the  government  like  that 
of  children  to  their  guardians."  It  is  a  serious  and 
ill-recognised    feature    of    Administrative    Sociahsm 

lOO 


Public  versus  Private  Enterprise 

that  it  concentrates  all  the  hopes  and  fears  of  the 
citizens  upon  the  Government.  No  more  infallible 
than  any  other  body  of  men,  a  Government  cannot 
afford  to  focus  upon  itself  all  the  complaints  and 
grievances  of  all  the  citizens.  If  we  could  refer  to 
Local  Government  all  the  mistakes  and  offences  we 
suffer  every  day,  the  country  would  be  in  a  constant 
state  of  turmoil  and  revokition. 

In  considering  the  relative  merits  of  Private  and 
Municipal  Trade,  one  important  difference  in  liberty 
of  action  is  apt  to  be  overlooked.  Private  enter- 
prise may  range  at  large.  "  National  frontiers  and 
local  boundaries  do  not  exist  for  it."  On  the  other 
hand,  Municipalities  are,  as  a  rule,  confined  to  their 
own  areas.  As  we  shall  see  later,  "  So  long  as 
private  enterprise  can  range  over  the  whole  country, 
whilst  municipal  enterprise  cannot  cross  its  own 
little  boundary,  so  long  will  the  attainment  of  the 
maximum  of  economy  and  efficiency  by  the  muni- 
cipality be  impossible."  The  advantage  lies  with 
private  trade. 

The  transfer  of  so  huge  a  share  of  private  enter- 
prise from  individual  or  private  firms  to  joint-stock 
companies  is  used  by  Administrative  Socialists  as  an 
argument  in  favour  of  municipal  trading.  Adopting 
the  dictum  of  Mill,  that  joint-stock  management  has 
by  no  means  the  advantages  in  energy  and  self- 
interest  over  public  government  which  enterprises 
managed  by  individuals  have,  the  Socialist  draws 
a  comparison  between  the  Board  of  Directors  of  a 
Company  and  the  Council  of  a  town.  "  We  are 
willing  to  admit,"  says  he,  "  that  individual  effort 
is   better   than    corporate    action.     But    commercial 

lOI 


Socialism  in  Local  Government 

affairs  now  are  largely  in  the  control  of  joint-stock 
companies,  which  correspond  to  municipal  corpora- 
tions ;  the  latter,  in  effect,  are  Boards  of  Directors, 
with  the  ratepayers  as  shareholders  ;  Municipal 
Councillors  and  Directors  alike  being  amateurs  carry- 
ing on  business  with  other  people's  money."  Others, 
not  so  bold,  are  content  to  draw  an  analogy  between 
municipal  trade  and  private  co-operative  societies. 

These  arguments,  however,  are  fallacious. 

In  the  first  place,  only  about  a  tenth  of  the  busi- 
ness of  all  kinds  that  is  done  in  this  country  is  in 
the  hands  of  joint-stock  companies.  In  the  second 
place,  it  is  generally  admitted  that  a  business  owned 
by  a  private  individual  is  usually  more  efficient  than 
a  joint-stock  company.  Therefore,  if  the  best  in- 
terest of  the  country  is  to  be  considered,  the  move- 
ment ought  to  be  not  towards  municipal  trade,  but 
back  to  individual  trading.  The  success  and  stability 
of  joint-stock  companies  is  largely  owing  to  the 
fact  that  when  an  individual  has  well  established  a 
business,  he  transfers  it  to  a  company,  which  thus 
enters  into  possession  of  a  successful  going  concern. 
The  initial  difficulties  are  overcome  by  individuals, 
and,  like  the  municipalities,  the  joint-stock  companies 
enjoy  the  result.  Anything,  therefore,  which  tends 
to  destroy  the  individual  pioneers  of  commercial 
progress  is  likely  to  be  disastrous  to  the  welfare  of 
the  nation.  In  the  third  place,  there  are  funda- 
mental differences  between  companies  and  muni- 
cipal bodies  which  cannot  be  ignored.  The  two 
bodies  are  similar,  at  first  sight.  So  is  a  genuine 
diamond  and  an  imitation  one.  The  first  great  dis- 
tinction is  this — a  joint-stock  company  is  a  voluntary 

102 


Public  versus  Private  Enterprise 

association  for  a  single  object,  governed  by  paid 
elected  directors,  who  are  specially  chosen,  either 
for  their  knowledge  of  the  business,  or  because  they 
can  exercise  influence  in  securing  custom.  A  muni- 
cipal corporation  is  a  compulsory  association  of  rate- 
payers for  uimmterable  objects,  mainly  governmental, 
not  trading.  The  councillors  are  not  elected  solely 
because  they  will  be  capable  directors  of  an  electric 
light  works,  a  gas  concern,  and  a  tramway  system. 
In  the  vast  majority  of  cases  they  have  no  knowledge 
or  experience  of  those  or  similar  undertakings,  and 
certainly  the  fact  of  securing  election  as  a  municipal 
councillor  is  no  evidence  of  business  capacity.  Edu- 
cation, licensing  of  music  halls,  drainage,  &c.  &c., 
are  the  vital  questions  at  local  elections,  to  say 
nothing  of  the  political  considerations  which  govern 
the  choice  of  candidates.  Moreover,  councillors  are 
not  paid  directors,  nor  have  they  any  serious  financial 
interest  at  stake. 

In  these  two  elements  lies  a  whole  world  of 
difference.  No  man  or  woman  can  be  forced  to 
become  a  shareholder  in  a  private  company.  There 
is  freedom  of  choice  as  to  incurring  liability.  In 
the  case  of  a  town,  a  large  minority  of  the  rate- 
payers are  forced  against  their  will  into  a  compulsory 
share  in  speculative  trading  ventures.  Their  credit 
is  pledged  against  their  wish.  To  take  a  popular 
example.  Suppose  by  means  of  the  referendum  an 
opportunity  had  been  given  to  the  ratepayers  of 
London  to  express  their  opinion  whether  they  should 
be  made  shareholders  in  that  disastrous  municipal 
venture,  the  London  County  Council  Thames  Steam- 
boat  Service.     How   many  would  have   returned   a 

103 


Socialism  in  Local  Government 

negative  answer  ?  A  great  proportion,  and  yet,  under 
the  present  system,  all  have  to  share  the  loss. 

Again,  it  is  indisputable  that  in  the  general  run 
of  joint-stock  companies,  the  stimulus  of  gain  is 
greater  in  the  directors  than  in  the  municipal  coun- 
cillors. The  shareholder,  too,  has  a  more  direct 
interest  than  a  ratepayer.  The  municipal  director 
has  a  thousand  and  one  things  to  consider  besides 
the  condition  of  the  town  gasworks  ;  and  the  rate- 
payer likewise.  Therefore,  as  with  all  Government 
undertakings,  the  ratepayer  (shareholder)  cannot 
exercise  the  effective  control  necessary  to  ensure 
success.  "The  one  drawback,"  as  Mr.  G.  B.  Shaw 
confesses,  "to  public  enterprise,  is  municipal  inertia. 
It  is  as  possible  for  a  local  authority,  as  for  an 
imperial  government,  to  do  nothing  over  and  above 
the  work  that  cannot  be  left  undone  without  obvious 
and  immediate  disaster.  Private  enterprise,  on  the 
other  hand,  must  discover  and  supply  pubhc  wants 
or  else  starve."  ^ 

Writing  upon  the  general  dissatisfaction  with  the 
conduct  of  municipal  affairs  in  Birmingham,  Coun- 
cillor J.  S.  Nettlefold  stated  as  one  of  the  causes, 
that  municipal  trading  was  "  not  on  business  lines." 

"  It  is  time  we  recognised  that  business  must  be 
conducted  under  very  different  conditions  from 
those  existing  forty  years  ago.  Competition  has 
increased  in  intensity  of  late  years,  and  successful 
manufacturers  have  been  obliged  to  overhaul  and 
reorganise  their  businesses.  The  Corporation,  how- 
ever, is  without  competitors,  and  has  therefore  not 
been  obliged  to  look  so  searchingly  into  its  position. 

^  The  Common  Sense  of  Municipal  Trading,  p.  53. 
104 


Public  versus  Private  Enterprise 

It  is  high  time  to  inquire  whether  our  municipal 
trading  is  conducted  on  the  best  business  hues.  We 
supply  the  water,  the  gas,  and  the  electric  light  for 
over  half  a  million  people  ;  we  make  and  keep  the 
roads,  organise  the  trams,  and  provide  baths  and 
parks.  We  manage  property,  in  land  and  building, 
worth  at  least  ^2,000,000.  Each  of  these  is  in  itself 
a  huge  commercial  undertaking.  Each  requires 
permanent  men  of  first-rate  ability,  who  are  con- 
versant with  the  latest  developments  in  their  own 
line.  This  is  in  addition  to  the  general  direction 
of  affairs  by  the  popular  representatives.  At  present 
these  large  business  undertakings  are  conducted 
without  the  spur  of  competition,  or  adequate  rewards 
to  the  successful.  The  only  controlling  influence  is 
a  fear  of  public  opinion  which  cannot  be  sufficiently 
informed  on  detail  to  be  a  safe  guide  in  matters  of 
business.  A  private  business  managed  on  these  lines 
would  sooner  or  later  result  in  failure.  Municipal 
concerns  do  not  fail,  but  the  rates  rise,  and  no  one 
knows  the  reason  why."  ^ 

Mr.  E.  E.  Leigh,  Counsel  to  the  Speaker  and 
Chairman  of  the  House  of  Commons,  stated,  before 
the  Joint  Select  Committee  on  Municipal  Trading, 
that  practically  the  whole  of  the  gas  undertakings 
had  been  originally  founded  by  a  company,  and 
subsequently  purchased  by  the  municipality.  "  In 
fact,  one  may  say  broadly,  municipalities  never  in- 
vented or  initiated  anything  either  with  regard  to 
tramways,  or  gas  or  electric  lighting,  and  yet  when 
a  company  has  become  flourishing,  they  have  been 
rather  forced  in  a  corner  to  sell  their  undertaking." 

'  Birmingham  Gazette,  Sept.  17,  1908. 
105 


Socialism  in  Local  Government 

As  against  these  objections  it  has  been  urged  that 
no  injustice  is  done  by  forcing  a  ratepayer  into 
compulsory  co-operation  where  the  municipal  trading 
concern  is  a  natural  monopoly  used  by  every  house- 
holder. But  how  many  municipal  undertakings  are 
natural  monopolies  used  by  every  ratepayer  ?  Water 
supply  is  the  only  one  which  promises  to  be  per- 
manent and  not  subject  to  supersession.  And  if 
municipal  enterprise  were  limited  to  that  matter 
alone,  there  would  be  small  room  for  controversy. 

To  return  to  the  other  analogy  which  has  been 
alleged,  viz.  that  municipal  trade  is  merely  a  form 
of  co-operation,  the  above  criticisms  are  equally 
applicable.  In  fact,  the  analogy  is  not  a  wise  one 
from  the  municipal  traders'  point  of  view,  because 
municipal  trading  is  concerned  chiefly  with  manu- 
facture, and  co-operation  is  mainly  confined  to  a 
cash  retail  trade.  The  failure  of  experiments  in 
co-operative  manufacturing,  as  Major  Darwin  sug- 
gests, may  be  "  partly  due  to  some  of  the  very  causes 
which  militate  against  success  in  Municipal  Trade."  ^ 

Moreover,  in  a  co-operative  society  each  member 
has  a  voice  in  the  management.  This  is  not  so  in 
the  case  of  municipal  co-operation.  In  very  many 
towns  there  is  an  ever-increasing  number  of  im- 
portant ratepayers  (limited  liability  companies)  whose 
credit  is  pledged,  and  who  have  no  municipal  vote. 
Local  Government  Board  Return  (No.  215  of  1906) 
gives  particulars  of  the  rateable  value  of  the  rateable 
hereditaments  in  seven  boroughs  in  respect  of  which 
no  right  of  voting  exists  because  they  were  occupied 
by  Corporations  or  Joint  Stock  or  other  Companies. 

^  "  Municipal  Trade,"  Independent  Review,  Jan.  1906. 

106 


Public  versus  Private  Enterprise 


Total  Rateable 

Rateable  Value 

Percentage 

Town. 

Value. 

of  Companies, 

of  Total 

&c. 

Value. 

(thousands) 

(thousands) 

£'s 

£'s 

Birmingham  . 

2888 

809 

28.0 

Leeds     .... 

2073 

550 

26.6 

Liverpool 

4568 

1480 

32.4 

Manchester   . 

4119 

1317 

32.0 

Sheffield 

1784 

537 

30.1 

West  Ham    . 

1292 

449 

34-7 

Holborn 

1030 

315 

30.6 

Would  any  one  venture  to  assert  that  the  principles 
of  co-operation  were  being  followed  in  the  case  of 
a  co-operative  society  where  an  important  body  of 
members  contributed  30  per  cent,  of  the  liability 
and  yet  had  no  vote  in  the  election  of  the  directors  ? 
Yet  here  we  have  such  a  state  of  affairs  in  the 
supposed  "  analogous  "  municipal  co-operative  trad- 
ing ;  and  strangely  enough,  the  advocates  of  this 
"  municipal  system  of  co-operation "  have  strenu- 
ously opposed  the  giving  of  any  vote  to  these 
disfranchised  members.  It  is  not  true,  therefore,  to 
assert  "  that  municipal  trading  is  based  on  the  same 
principle  as  co-operative  trading." 

To  summarise  our  conclusions  from  the  foregoing 
considerations,  it  appears  then  : — • 

1.  That  it  is  contrary  to  public  policy  to  combine 
the  functions  of  trading  and  government  in  one 
administrative  body. 

2.  That  the  addition  of  trading  duties  to  the 
already  heavy  responsibilities  of  local  authorities 
tends  to  the  decay  of  personnel,  the  introduction  of 

107 


Socialism  in  Local  Government 

inefficiency,  waste,  and  corruption,  to  the  establish- 
ment of  a  dominant  bureaucracy,  and  to  the  loss 
of  the  vital  energy  and  intelligence  of  individual 
initiative. 

3.  That  Administrative  Socialists  base  their  ad- 
vocacy of  Municipal  Trade  upon  the  analogy  of 
joint-stock  company  trading,  which,  it  is  generally 
admitted,  is  not  so  efficient  and  economical  as  the 
enterprise  of  private  firms  and  individuals.  More- 
over, the  latter  are  the  pioneers  of  commercial  pro- 
gress, and  anything  which  threatens  their  extinction 
is  a  step  in  the  direction  of  loss  of  commercial 
supremacy. 

4.  That  the  analogy  of  co-operative  societies  is 
equally  unsound. 


108 


IX 

THE    LESSON    OF    STATE 
ENTERPRISE 


The  chief  and  overwhelming  objection  to  pubHc 
enterprise  lies,  as  we  have  seen,  in  its  inferiority  to 
private  effort.  Towns  which  have  taken  over  flour- 
ishing semi-monopoly  concerns  established  by  private 
companies  have  not  been  as  yet  severely  tested  by 
the  effluxion  of  time  and  the  progress  of  invention. 
Except  in  the  case  of  gas  undertakings,  where  private 
enterprise  has  indubitably  proved  its  superiority, 
municipal  trading  is  largely  in  the  experimental 
stage.  What  is  or  will  be  the  character  of  municipal 
trading  establishments  can  only  be  gauged  from  an 
examination  of  the  analogous  services  rendered  by 
our  huge  central  Government  departments. 

What  is  the  general  verdict  of  public  opinion  upon 
State  industrialism  as  seen  in  Government  establish- 
ments ?  '<  It  has,"  says  Mr.  Rae,  "  one  great  natural 
defect — its  want  of  a  personal  stake  in  the  produce 
of  the  business  it  conducts,  its  want  of  that  keen 
check  on  waste,  and  that  pushing  incentive  to  exer- 
tion which  private  undertakings  enjoy  in  the  eye  and 
energy  of  the  master.  This  is  the  great  tap  root 
from    which    all    the    usual    faults    of    Government 

109 


Socialism  in  Local  Government 

management  spring — its  routine,  its  red  tape  spirit, 
its  sluggishness  in  noting  changes  in  the  market,  in 
adapting  itself  to  changes  in  the  public  taste,  and  in 
introducing  improved  methods  of  production."  The 
outcome  is  ''  an  unprogressive,  unenterprising,  unin- 
ventive  administration  of  business."  ^ 

If  necessary,  many  volumes  might  be  printed  of 
facts  illustrating  this  wholesale  censure.  The  nume- 
rous Reports  of  Royal  Commissions  and  Parliamen- 
tary Committees  upon  Government  Departments, 
issued  during  the  last  century,  teem  with  examples. 
Whether  it  be  the  Committee  of  1828,  the  Sebastopol 
Committee  of  1856,  the  Commissions  of  1880-6, 
or  the  various  Commissions  following  on  the  War 
in  South  Africa,  each  has  its  sorry  tale  of  public 
failure. 

Take,  for  instance,  the  Ordnance  Department,  an 
important  manufacturing  establishment.  The  evi- 
dence given  before  the  Sebastopol  Committee  away 
back  in  the  'fifties  contains  a  ludicrous  instance  of 
official  incompetence.  Having  decided  to  set  up 
machinery  for  making  guns,  the  Department  bought 
the  ordinary  kind  of  pig  iron  and  made  about  one 
hundred  guns.  Not  one  was  used.  ''They  were 
pronounced  rotten."  Then  the  Department  decided 
to  manufacture  rifled  cannon.  Sir  William  Arm- 
strong handed  over  his  patent  to  the  War  Office  ; 
was  appointed  Superintendent  of  the  Royal  Gun 
Factory,  and  chief  engineer  of  the  rifled  ordnance 
department.  A  business  was  set  up  at  Elswick  by 
the  War  Office  at  works  previously  owned  by  Sir 
W.  Armstrong,  and  ^^8 5,000  was  advanced.     Directly 

^   Contemporary  Socialism,  p.  409. 
no 


The  Lesson  of  State  Enterprise 

after  this  transaction  the  officials  at  Woolwich  set 
up  a  factory  of  the  same  kind,  apparently  with  a 
view  of  controlling  the  price  at  Elswick !  Another 
Committee  upon  Ordnance  sat  in  1862-3  and  evi- 
dence was  heard  of  the  "  most  portentous  character." 
The  consequence  of  Government  enterprise  in  gun 
manufacture  was  thus  summed  up  by  Admiral 
Halstead  in  June,  1864:  "The  result  is  that  the 
largest  and  most  costly  fieet  of  the  world,  entrusted 
with  the  security  of  the  largest  maritime  empire,  has 
long  been  presented  to  all  but  England's  eyes  with- 
out a  gun  fit  for  the  special  warfare  of  the  day,  and 
with  special  guns  fit  for  no  warfare  whatever."  The 
cost  of  this  venture  was  nearly  three  millions  of 
money.  The  extraordinary  feature  of  the  matter  was 
that  such  famous  men  as  Bessemer  and  Whitworth, 
as  well  as  Armstrong,  were  quite  ready  to  start  in 
competition  to  produce  the  best  guns.  Ultimately, 
Sir  W.  Armstrong  severed  his  connection  with  the 
Government  at  Elswick,  received  ^^6 5,0 00  as  com- 
pensation, set  up  a  manufactory  at  Elswick,  and 
supplied  the  best  guns  to  foreign  Governments. 
That  was  the  end  of  the  "  gigantic  ordnance  failure," 
which  has  been  repeated  at  intervals  in  the  Ordnance 
Department  ever  since.  Not  the  least  remarkable 
feature  of  this  piece  of  history  is  that  Sir  William 
Armstrong  was  able  as  a  private  manufacturer  to 
bring  the  science  of  manufacturing  artillery  to  a 
high  standard,  an  achievement  which  he  found 
impossible  under  Government. 

Describing  the  condition  of  the  Army  in  1887, 
Lord  Randolph  Churchill  stated,  in  a  famous  speech, 
that  "  Our  horse  artillery   ...  is  armed  with  what 

III 


Socialism  in  Local  Government 

Lord  Wolseley  has  described  as  the  worst  gun  in 
Europe.  .  .  .  Our  British  Infantry  ...  is  armed 
with  rifles  which  have  proved  in  action  to  be  de- 
fective, and  of  inferior  description,  while  the  bayonets 
bend  and  twist  when  strain  is  put  upon  them.  Our 
cavalry  are  armed  with  swords  of  equally  bad 
manufacture.  .  .  .  There  is  a  very  important  de- 
partment of  the  War  Office — the  Ordnance  Depart- 
ment— and  that  department  is  under  the  impression 
that  they  are  capable  of  designing  heavy  powerful 
guns.  In  1883  or  1884  they  designed  a  gun  called 
the  43-ton  gun,  and  they  called  upon  Messrs.  Arm- 
strong &  Co.,  of  Elswick,  to  construct  fifteen  of 
these  43-ton  guns.  Messrs.  Armstrong,  who  knew 
more  about  gun-construction  than  the  Ordnance 
Department,  suggested  that  the  design  was  bad,  and 
that  it  would  be  a  bad  gun.  The  Ordnance  Com- 
missioners told  Messrs.  Armstrong  to  mind  their  own 
business  and  to  make  the  guns.  The  guns  were 
made,  and  cost  something  like  ^100,000,  and  when 
they  were  made  they  were  sent  to  Woolwich  and 
were  to  be  sent  to  sea  in  the  ships  of  war.  At  this 
moment  there  comes  forward  Captain  Noble — who 
had  been  formerly  employed  by  the  Government, 
and  who  is,  I  believe,  a  director  of  the  Armstrong 
company — and  says,  '  Do  not  send  those  guns  to 
sea  :  they  are  bad  guns  and  cannot  stand  the  charge 
which  you  are  going  to  place  in  them.'  The  Ord- 
nance Department  told  Captain  Noble  to  mind 
his  own  business,  and  the  guns  were  sent  to 
sea  —  four  of  them  on  board  the  Collingwood,  a 
ship  as  to  which  I  shall  have  something  to  say  to 
you  presently.     And  what  happened  ?     One  of  these 

112 


The  Lesson  of  State  Enterprise 

guns  burst  when  the  second  round  was  fired,  with 
only  half  a  charge.  The  whole  of  the  guns  were 
recalled  and  condemned,  and  an  expenditure  of  some 
;^ 1 00,000  was  found  to  have  been  wasted.  Now, 
mind  you,  the  Ordnance  Department  was  told  by  the 
contractors  that  the  guns  were  bad  before  they  were 
constructed  .  .  .  and  yet  the  guns  were  ordered  to 
be  made,  the  guns  were  sent  to  sea,  and  the  guns 
burst.  Now,  would  you  believe  it — if  we  had  to  go 
to  war  to-morrow,  four  of  these  precious  guns  are 
being  kept  in  reserve  in  order  to  be  placed  on  board 
the  Collingwoodj  which  will  be  one  of  the  ships 
we  would  have  to  rely  on  as  part  of  the  British 
fleet.  Therefore,  the  sailors  of  the  Collingwood  will 
know  that  .  .  .  they  are  supposed  to  engage 
heavy  artillery  with  guns  which  it  is  at  least  a 
thousand  to  one  will  burst  when  fired  with  more 
than  half  a  charge.  You  would  think,  and  any 
practical  person  would  think,  that  the  officials  re- 
sponsible for  these  guns  would  have  fled  from  the 
country,  or  at  least  have  been  dismissed  from  the 
public  service.  Not  a  bit  of  it.  The  officials  re- 
sponsible for  these  guns  are  occupying  high  official 
positions  in  the  War  Office  at  the  present  moment. 
And  they  are  now  engaged  in  spending  large  sums 
of  money  in  the  construction  of  what  are  called 
iio-ton  guns,  which  are  to  fire  1000  lbs.  of  powder 
and  to  discharge  enormously  heavy  shot  ;  and  the 
Royal  Commission  has  been  investigating  the  re- 
ports relating  to  these  guns,  which  cost  over  ^20,000 
each  and  can  only  fire  about  150  rounds.  The 
report  says,  in  a  very  mild  but  suggestive  manner  : 
'They    regret    to    remark   that  the    result  does   not 

113  H 


Socialism  in  Local  Government 

appear  to  be  equal  to  the  expenditure,  and  that  it 
is  very  unfortunate  if  nothing  better  can  be  devised.' 
It  may  be  observed  that  these  iio-ton  guns  were 
faihires.  In  the  matter  of  gun  manufacture,  private 
enterprise  is  always  far  in  advance  of  the  Govern- 
ment's Ordnance  Department. 

"  We  will  leave  the  War  Office  alone  for  a 
moment,"  continued  Lord  Randolph  Churchill,  "and 
turn  to  the  Admiralty.  It  would  appear  that  we 
have  a  very  powerful  fleet  on  paper  ;  but  if  you 
look  into  the  facts,  it  is  not  so  powerful.  In  1883 
two  large  ships  were  launched,  the  Ajax  and  the 
Agameninori,  built  for  having  great  offensive  power 
and  great  speed ;  but  unfortunately  it  was  found 
when  they  were  launched  and  went  to  sea  that  if 
they  went  faster  than  eight  miles  an  hour  they 
would  not  steer,  and  became  utterly  unmanage- 
able, and,  therefore,  for  all  purposes  of  a  ship  of 
war,  they  were  seriously  defective.  What  do  you 
think  those  two  ships  cost  ?  They  cost  ^800,000. 
Eight  hundred  thousand  pounds  was  spent  on  these 
two  ships  of  war,  which  could,  in  all  probability,  be 
sent  to  the  bottom  by  any  adversary  of  anything  like 
equal  size  which  could  steer  and  be  handy  when  at 
full  speed.  Some  years  later  they  turned  out  the 
ship  Iniperieuse,  which  was  to  be  armoured  in  a 
particular  way.  When  they  came  to  send  her  to 
sea,  they  found  that  she  drew  3  feet  3  inches  of 
water  more  than  she  was  designed  to  draw.  Observe 
the  result.  The  armour  which  she  would  have  had 
above  water  now  became  below  water.  She  was 
supposed  to  be  a  powerfully  protected  ship,  but 
in    consequence    of    her    construction    she    became 

114 


The  Lesson  of  State  Enterprise 

unprotected  ;  and  on  the  Impcrieuse  the  Admiralty 
spent  ^500,000.  Then  the  Admiralty  went  on,  not  in 
the  least  discouraged,  to  construct  six  very  large  ships 
of  what  are  called  the  '  Admiral '  class.  The  '  Admiral ' 
class  are  ships  named  after  the  great  admirals,  and 
one  of  the  '  Admiral '  class  is  the  Collingivood.  They 
are  supposed  to  be  protected  ships,  and  supposed  to 
be  able  to  engage  the  heavy  artillery  of  land  forts 
or  hostile  ironclads.  But  this  is  certain,  that  so 
badly  constructed  is  this  class  of  ships,  so  little  is 
the  protection  they  have,  so  unscientifically  is  that 
protection  applied,  that  for  all  intents  and  purposes 
the  'Admiral'  class  of  ships  are  unprotected,  and  are 
not  in  a  condition  to  engage  successfully  heavy  land 
artillery  and  the  heavy  artillery  of  ironclads.  This 
class  cost  ^4,500,000.  Some  are  finished  ;  others 
will  be  finished  in  1889,  and  it  is  on  the  'Admiral' 
class  that  the  British  nation  have  greatly  to  depend 
if  they  have  to  defend  their  coasts  and  their  com- 
merce. Think  of  the  position  of  the  sailors  on 
board  the  Collingwood.  The  Collingwood  is  one  of 
this  class.  The  sailors  of  the  Collingwood  know  they 
have  a  gun  which  is  likely  to  burst  if  it  is  fired,  and 
that  they  are  in  a  ship  which,  so  far  from  being  a 
protected  ship,  can  be  perforated  at  half-a-dozen 
vital  points  by  the  artillery  of  the  enemy  and  sent  to 
the  bottom.  But  the  Admiralty  were  not  content 
with  that,  and  they  proceeded  to  construct  two  other 
ships — the  Victoria  and  Sans  Pareil — and  of  those 
ships  I  will  only  say  that  a  person  very  high  in  office 
in  the  Admiralty  considers  those  two  ships  to  be 
even  worse  than  the  ships  of  the  '  Admiral '  class  :  and 
on  those  two  ships  they  propose  to  spend  ^^  1,600,000. 

115 


Socialism  in  Local  Government 

I  have  proved  to  you  that  a  total  expenditure  of 
^7,400,000  has  been  incurred  by  the  Admiralty 
practically  for  no  purpose  at  all,  and  in  1885  it 
occurred  to  the  Admiralty  that  they  would  not  do 
badly  to  change  the  constructor  who  was  mainly  re- 
sponsible for  this  splendid  effort  at  shipbuilding. 
.  .  .  Now  I  have  to  draw  your  attention  to  seven 
more  ships  to  be  constructed  by  the  Admiralty,  and 
designed  in  1884.  They  are  called  belted  cruisers, 
ships  of  the  '  Australia '  class,  that  is  to  say, 
Australia  is  the  name  of  one  of  the  ships.  They  are 
designed  to  have  a  belt  of  armour  running  round 
their  sides  five  feet  six  inches  wide,  and  it  was  in- 
tended that  no  less  than  eighteen  inches  of  that 
armour  should  be  above  the  water-line,  so  as  to 
protect  the  ship  from  any  hostile  shot.  It  is  now 
discovered  that  when  the  ships  have  got  their  full 
quantity  of  coal  on  board  to  enable  them  to  keep  the 
sea,  the  belt  of  armour  to  protect  them,  instead  of 
being  eighteen  inches  above  the  water-line,  will  be 
six  inches  below  it.  The  total  cost  of  those  seven 
ships  will  be  two  millions  of  money,  and  what  I 
have  told  you  about  those  seven  ships  is  fully  and 
frankly  admitted  by  the  First  Lord  of  the  Admiralty. 
In  the  official  document  which  he  laid  before  the 
House  of  Commons,  explanatory  of  the  Navy  esti- 
mates for  this  year,  he  confessed  that  if  the  ships  are 
to  keep  the  sea — that  is  to  say,  if  they  are  to  have  a 
sufficient  supply  of  coals  on  board — the  armour  will 
be  six  inches  below  water,  and  that  they  will  be 
unprotected.  This  confession  has  not  yet  attracted 
notice.  What  is  the  grand  result  of  all  this  ?  The 
result  of  all  this  is,  that  in  the  last  twelve  or  thirteen 

116 


The  Lesson  of  State  Enterprise 

years  eighteen  ships  have  been  designed  by  the 
Admiralty  for  certain  purposes,  and  on  the  strength 
of  the  Admiralty  statements  Parliament  has  faithfully 
voted  the  money.  The  total  money  which  has  been 
voted  for  these  ships  has  been  about  ten  millions 
of  the  money  of  the  taxpayers,  and  it  is  now  dis- 
covered, and  officially  acknowledged,  that,  in  respect 
of  the  purposes  for  which  these  ships  were  designed, 
and  of  the  purpose  for  which  that  ten  millions  was 
spent,  the  whole  of  the  money  has  been  misapplied, 
wasted,  and  thrown  away. 

"...  We  pay  a  large  sum  of  money  for  engineers 
at  the  dockyards  and  at  the  Admiralty  ;  ;^ioo,ooo  a 
year  for  what  is  called  the  scientific  branch  of  the 
Admiralty  ;  and,  further,  a  considerable  sum  for 
schools  of  design  and  construction.  But  the  Com- 
mittee who  found  out  these  things  report  that 
there  is  no  practical  engineering  department  at  the 
Admiralty  with  business  capacity  competent  to 
design  engines,  and  to  bring  the  most  varied  know- 
ledge and  most  recent  experience  to  bear  on  the 
construction  of  engines.  In  other  words,  although 
we  spend  an  enormous  sum  of  money  upon  this 
extensive  department,  it  has  been  proved  before  a 
Committee  to  be  unable  to  produce  what  any  com- 
petent firm  could  not  do  without,  namely,  a 
practical  engineer.  You  are  aware  that  a  great 
quantity  of  rope  is  used  in  the  Navy,  Well,  the 
Admiralty  think  they  can  make  rope  much  better 
than  the  trade.  It  was  proved  in  evidence  before 
this  same  Committee  that  the  cost  in  the  manufacture 
of  rope  by  the  Admiralty  exceeds  that  of  the  trade 
by   25   per  cent.     In  this  one  department  alone   it 

117 


Socialism  in  Local  Government 

was  possible  for  the  Admiralty  to  save  ^50,000  a 
year.  The  Royal  Commission  presided  over  by  Sir 
Fitzjames  Stephen,  which  I  alluded  to  in  the  earlier 
part  of  my  remarks,  makes  mention  of  another 
matter  which  I  should  like  to  bring  before  you. 
We  expend  a  large  amount  in  maintaining  at  Ports- 
mouth and  Woolwich  and  Greenwich  very  extensive 
and  perfect  chemical  laboratories  ;  yet  these  perfect 
and  extensive  establishments,  with  all  their  highly- 
paid  officials,  have  not  yet  been  able  to  devise  or  in- 
vent a  single  fuse  which  can  be  relied  upon  to  burst 
shell.  At  the  bombardment  of  Alexandria  a  very 
large  proportion  of  shells  fired  never  burst,  and  of 
those  now  in  use  in  the  British  service  there  is  not 
a  single  fuse  certain  to  burst  a  shell"  (p.  195). 

No  wonder  the  noble  Lord  appealed  for  a  radical, 
sweeping,  and  even  revolutionary  reform  of  those 
two  great  departments  of  the  War  Office  and  the 
Admiralty.  Judging,  however,  from  later  Reports  of 
Royal  Commissions,  no  reforms  were  effected. 

In  a  second  speech,  in  July,  1887,  Lord  Randolph 
Churchill  adduced  facts  as  to  "  the  immense  differ- 
ence between  the  estimates  of  building  ships  in 
dockyards  and  the  actual  cost  of  the  vessels,"  and 
also  the  large  increase  in  the  cost.  "  Examining 
the  details  of  Vote  6,  I  find  that  there  are  some 
curious  facts  as  to  the  cost  of  building  ships  in 
dockyards.  In  1869-70  the  average  cost  was  ;^55 
per  ton  ;  in  1877-78  it  was  ^80  ;  and  in  1884-85, 
^109.  Therefore  the  cost  of  building  ships  in  the 
dockyards  has  increased  since  1870  by  more  than 
50  per  cent.,  and  since  1878  it  has  increased  by  ^29 
per  ton.     This  increase  is  not  accounted  for  by  any 

118 


The  Lesson  of  State  Enterprise 

increase  in  the  cost  of  labour.  On  unarmoured 
ships  the  cost  of  labour  since  1878  has  only  in- 
creased by  £^.  .  .  .  We  not  only  get  a  mean  increase 
of  ^5  in  the  cost  of  labour,  but  we  get  a  gross  in- 
crease of  ^29  per  ton  in  the  cost  of  building.  The 
price  of  material  will  not  account  for  the  increase, 
for  there  has  been  an  immense  fall  since  1874  in 
the  prices  of  nearly  all  structural  materials  "  (p.  203). 

Quoting  an  article  of  great  ability  in  the  West- 
minster  Review  of  May,  1887,  the  speaker  said  : — 

"  After  every  possible  allowance  has  been  made 
that  the  most  indulgent  and  reasonable  of  censors 
can  allow,  after  all  the  difficulties  that  confront  the 
Admiralty  have  been  fully  extenuated,  after  the  neces- 
sarily more  cautious  and  circumlocutionary  processes 
common  to  governmental  work  have  been  taken  into 
consideration,  there  still  remains  a  formidable  and 
apparently  unanswerable  indictment  lying  at  the 
door  of  those  who  are  responsible  for  our  naval  ex- 
penditure. The  charges  of  wasteful,  inefficient,  and 
inadequate  administration  have  been  proved  to  the 
hilt,  not  by  the  impersonal  or  irresponsible  criticisms 
of  the  public  press,  of  anonymous  pamphleteers,  or  of 
foreign  rivals,  but  by  the  evidence  of  Admiralty 
officials  themselves,  and  by  the  well-considered 
and  weighty  deliberations  of  successive  Committees 
appointed  to  inquire  into  the  subject.  Of  such 
Committees  there  are  two  whose  recent  reports  are 
entitled  to  special  consideration — the  first  being  the 
Committee  on  the  building  and  repair  of  ships  ;  the 
second,  the  Committees  appointed  to  inquire  into 
the  Admiralty  and  dockyard  administration  and  ex- 
penditure.    They    reported   in    October,    1884,  that 

119 


Socialism  in  Local  Government 

the  Admiralty  system  failed  to  show  the  entire  cost 
of  labour  on  a  dockyard-built  ship  ;  that  the  whole 
question  of  incidental  charges  was  so  obscure  as  to 
render  unreliable  any  comparison  between  the  cost 
of  shipbuilding  in  public  and  private  yards ;  that  the 
incomplete  and  meagre  character  of  the  specifications 
furnished  by  the  Admiralty  to  contractors  not  only 
increased  the  time  during  which  ships  were  under 
construction,  but  also  materially  enhanced  the  cost 
of  the  work ;  that  the  time  occupied  in  building  a 
ship  under  contract  compared  favourably  with  the 
period  of  construction  in  a  dockyard,  the  whole  ten- 
dency of  contract  work  being  to  avoid  delay  ;  that 
a  heavy  expenditure  was  incurred  in  refitting  ships 
that  have  completed  their  commission  when  it  was 
really  not  required,  and  that  the  Admiralty  would  do 
well  to  follow  more  largely  the  practice  followed  in 
the  merchant  navy,  of  adding  new  ships  to  their 
fleet  in  preference  to  incurring  a  heavy  expenditure 
on  old  ones.  .  .  .  They  found  that  alike  in  the 
general  principles  of  management  and  in  the  merest 
matters  of  detail  the  system  was  inefficient  ;  that  in 
spite  of  enormous  sums  voted  for  machinery  and 
works  "  the  tools  employed  were  of  an  obsolete 
character,  which  must  necessarily  increase  the  cost 
of  the  work  "  ;  that  large  sums  of  money  were  wasted 
in  patching  up  old  ships  when  a  very  little  more, 
or  perhaps  even  less,  would  provide  entirely  new 
vessels ;  that  ships  were  over  and  over  again  stripped 
and  "  torn  up  "  when  about  to  be  placed  in  a  new 
commission,  although  no  such  expenditure  was 
required  ;  that  there  was  a  want  of  touch  between 
the  several  heads  of  departments  coincidently  with 

I20 


The  Lesson  of  State  Enterprise 

too  much  centralisation  of  detail,  which  caused 
"delay  and  unnecessary  correspondence"  ;  that  the 
whole  administrative  arrangements  were,  in  fact,  such 
as  no  private  firm  or  individual  would  be  likely, 
even  if  he  could  afford  it,  to  tolerate  for  a  moment. 
But  more  still  remained  behind.  Two  years  after  the 
Committee  on  the  building  and  repair  of  ships  had 
presented  their  report,  another  of  these  interesting, 
but,  it  is  to  be  feared,  absolutely  unheeded  docu- 
ments was  submitted  to  my  Lords  of  the  Admiralty, 
in  which  the  Committee  on  dockyard  expenditure 
reported  that  "  the  supervision  of  labour  is  unsatis- 
factory, and  that  idleness  and  incompetence  are  prac- 
tically unchecked  "  ;  that  "  the  want  of  co-operation 
between  the  superintendent  and  the  officers  acts 
unfavourably  upon  the  cost  of  works  in  progress "  ; 
and  "  we  can  imagine  no  more  unsatisfactory  state 
of  affairs,  nor  one  more  calculated  to  subvert  all 
effectual  control  over  the  men  "  ;  that  ''  very  serious 
inconvenience  and  waste  of  labour  are  experienced 
both  in  procuring  articles  from  contractors  and  in 
drawing  them  from  stores  "  ;  that  the  "  condition  into 
which  dockyard  business  has  been  gradually  drifting 
is,  and  has  been  for  some  years,  entirely  underrated 
in  the  Admiralty  department,  and,  we  greatly  regret 
to  add,  to  the  very  serious  detriment  of  the  service  "  ; 
that  there  "  is  no  systematic  or  concurrent  financial 
control  over  dockyard  expenditure  "  ;  that  "  duplica- 
tion of  accounts,  over-employment  of  clerks,  prepa- 
ration of  voluminous,  and  in  some  cases  useless, 
returns,  and  defective  audit "  are  "  defects  common  to 
all  yards  and  to  all  branches  of  work  therein  "  ;  and 
that  as  regards  "  management  "  the  system  is  seriously 

121 


Socialism  in  Local  Government 

defective,  and  does  not  secure  a  fair  return  for  the 
vast  outlay  annually  absorbed  therein  "  (pp.  204-6). 

In  a  third  speech,  in  September,  1887,  Lord 
Randolph  Churchill  stated  : — 

"  If  the  State  purchases  articles  for  its  own  use 
by  contract,  it  generally  pays  from  20  to  40  per 
cent,  more  than  a  private  individual  would  do.  If 
the  State  thinks  it  will  manufacture  the  articles  it 
wants  by  itself,  the  cost  for  manufacturing  is  about 
double  what  the  private  manufacturer  would  incur. 
These  are  no  mere  assertions — they  have  been 
proved  over  and  over  again  by  speeches,  Committees, 
and  inquiries  of  all  sorts  and  kinds — they  are  unde- 
niable facts  ;  and  with  all  this  ludicrous  and  shame- 
ful extravagance  in  public  expenditure,  it  is  admitted 
by  all,  at  the  same  time,  that  we  have  not  real 
efficiency  in  our  public  service  and  our  public 
departments"  (p.  220). 

In  a  speech  on  "The  Cost  and  Condition  of  the 
British  Army,"  in  the  House  of  Commons  on 
8th  March,  1888,  Lord  Randolph  Churchill  said: 
"The  most  remarkable  feature  of  the  Crimean  War 
was  that  while  the  British  soldier  was  covered  with 
glory,  the  Civil  Administration  was  covered  with  the 
deepest  disgrace.  But  take  the  series  of  scandals  in 
the  last  few  years.  Besides  the  scandals  connected 
with  the  swords  and  bayonets  of  the  Army  and  the 
cutlasses  of  the  Navy,  and  that  connected  with  the 
43-ton  gun,  there  appears  to  me  to  be  a  very  un- 
pleasant business  at  the  present  moment  about  what 
is  known  as  the  9.2  inch  gun.  We  have  not  quite 
arrived  at  the  truth  about  it,  but  the  Secretary  of 
State  for  War  has  assured  the  House  that  a  gun  with 

122 


The  Lesson  of  State  Enterprise 

a  cracked  lining  is  a  better  one  than  a  gun  with 
a  Hning  which  is  not  cracked.  These  are  matters  on 
which  we  have  not  yet  full  information  ;  but  look 
at  the  commissariat  scandal  in  Egypt,  that  ter- 
rible and  unequalled  scandal  in  connection  with  the 
ammunition  for  the  column  in  the  desert.  It  is  not 
that  I  want  to  irritate  the  authorities  by  placing 
upon  them  personally  the  responsibility  for  these 
matters  :  I  place  the  responsibility  on  the  system. 
The  system  which  has  produced  these  results  in  the 
past  is  the  same  which  obtains  up  to  the  present 
time  ;  and  not  in  the  slightest,  in  the  most  trifling 
particular,  has  that  system  been  really  altered  ;  it  is 
as  powerful  for  evil  now  as  it  was  then.  We  are 
told  that  there  is  a  Parliamentary  control  ;  but  what 
has  Parliament  ever  done  to  bring  any  single  person 
to  justice  for  these  scandals  ? "  (p.  3  1 3). 

Lord  Randolph  Churchill  concluded  his  speech 
by  stating  what  his  position  as  Chancellor  of  the  Ex- 
chequer in  1886  was  : — 

'<  I  was  called  upon  to  defend  an  expenditure 
which  I  knew  was  wasteful.  I  knew  I  should  be 
called  upon  to  sustain  and  maintain  a  system  and  an 
establishment  which  was  rotten"  (p.  319). 

Such  was  the  position  as  regards  our  Government 
manufacturing  departments  twenty  years  ago  ;  and 
such  has  been  the  position  at  any  time  during  the 
past  hundred  years.  One  would  think  these  ruthless 
condemnations  by  Committees,  particularly  in  the 
period  between  1880  and  1886,  would  have  led  to 
reform.  Unfortunately,  as  we  know  to  our  cost, 
permanent  reform  seems  to  be  impossible  in  any 
Government  establishment.     The  waters  are  troubled 

123 


Socialism  in  Local  Government 

for  a  few  days  after  the  appearance  of  these  Reports, 
but  they  soon  sink  again  into  the  quiet  of  ineptitude 
and  inertness.  A  few  officials  receive,  instead  of  dis- 
missal, a  good  pension  ;  others  are  promoted  to 
higher  positions  in  other  departments  ;  and  the 
country  jogs  along  thinking  great  reforms  have  been 
effected.  And  so  in  1903  we  have  a  Report  of  His 
Majesty's  Commissioners  on  the  War  in  South  Africa 
containing  these  condemnations  : — 

"  A  serious  deficiency  in  the  stores  and  mate- 
rial required,  ...  a  condition  of  affairs  '  full  of 
peril  to  the  Empire,'  inasmuch  as  '  we  were  not 
sufficiently  prepared  even  for  the  equipment  of  the 
comparatively  small  force  which  we  had  always  con- 
templated might  be  employed  beyond  the  limits  of 
this  country  in  the  initial  stages  of  a  campaign.'  " 
The  deficiency  of  stores  "  had  been  of  long  standing." 
..."  The  factories  had  fallen  into  an  unsatisfactory 
condition."  .  .  .  "  A  great  deal  of  the  machinery  in 
the  Ordnance  factories  urgently  needed  replacement 
by  labour-saving  machinery."  .  .  .  ''  In  the  way  of 
artillery  materiel  we  were  considerably  behind  other 
European  nations."  ..."  An  error  of  a  serious 
nature  in  the  sighting  of  the  rifies  was  discovered 
after  the  war  had  been  some  months  in  progress."  .  .  . 
"  The  present  cavalry  sword  is  the  very  worst  that 
could  possibly  be  used."  .  .  .  <'The  reserves  of 
clothing  were  inadequate  to  meet  even  peace  re- 
quirements." ..."  The  ammunition  pouches  were 
defective."  ..."  In  the  matter  of  remounts,  prepara- 
tions for  war  were  indequate." 

The  evidence  of  civilian  medical  men  in  the  war 
was,  that  "  the  quantity  and  quality  of  the  equipment 

124 


The  Lesson  of  State  Enterprise 

prepared  and  supplied  to  the  hospitals,  &c.,  were 
defective,  and  generally  they  were  antiquated  and 
badly  organised."  ...  ''  Owing  to  the  absence  of 
soap  .  .  .  half  the  force  in  South  Africa  became 
verminous  " — the  supply  of  soap  being  part  of  the 
duty  of  the  Army  Ordnance  Department  !  .  .  . 
The  Royal  Commission  of  1890  commented  ad- 
versely on  "  the  want  of  consultative  power  which 
has  characterised  the  administration  of  the  War 
Office."  "  In  the  ten  years  which  followed  that 
Report  the  evil  which  it  condemned  was  certainly 
not  removed,  though  there  were  some  attempts  at 
improvement."  Thus  showing  that  the  results  of 
Government  inquiries  and  Reports  are  practically 
nil.     The  waste  and  inefficiency  continues. 

Another  condemnatory  Report  is  that  of  the  Royal 
Commission  on  War  Stores  in  South  Africa,  1906. 
Dealing  with  the  question  of  contracts,  it  states  : — 

"  Most  of  the  contractors  who  had  extensive 
dealings  with  the  Army  were  favoured  at  the  expense 
of  the  taxpayer.  This  favour  was  shown  not  from 
any  corrupt  motive,  .  .  .  but  simply  because  it 
saved  trouble  to  make  concessions,  and  because  it 
was  not  realised  that  there  was  a  duty  to  protect  the 
public  funds  against  the  claims  of  contractors.  .  .  . 
The  business  of  the  Office  of  the  Director  of  Supplies 
was  conducted  with  inexcusable  carelessness  and 
extraordinary  ineptitude,  and  that  of  the  Pay  Depart- 
ment with  a  want  of  intelligence  that  is  deplorable. 
.  .  .  The  faults  of  their  administration,  in  our 
opinion,  spring  mainly  from  .  .  .  irresponsibility, 
indifference,  and  want  of  intelligence.  No  private 
firm  could  avoid  bankruptcy  if  it   allowed  its  agents 

125 


Socialism  in  Local   Government 

to  deal  with  business  matters  in  the  mode  in  which 
these  three  officers  have  dealt  with  the  purchase 
and  sale  of  supplies.  The  Army  Service  Corps  is, 
in  fact,  a  commercial  undertaking,  and  its  officers 
should  be  taught  to  recognise  that  it  must  be  con- 
ducted on  business  principles."  ..."  We  estimate 
the  total  preventable  loss  to  the  home  taxpayer, 
during  the  twenty-two  months  after  the  peace,  as 
lying  somewhere  between  three-quarters  of  a  million 
sterling  and  one-and-a-quarter  million  sterling." 

The  Annual  Reports  of  the  Comptroller  and  Auditor 
General  insistently  direct  attention  to  serious  defects 
in  the  military  machine,  but  no  attention  is  given 
either  by  the  public  or  its  representatives.  The 
Public  Accounts  Committee  is  also  ignored.  In 
July,  1905,  a  Report  of  this  Committee  severely 
criticised  the  Admiralty  for  incurring  an  expenditure 
of  ;^ 1 60,000  upon  the  refit  of  ships  about  to  be  sold 
as  of  no  further  use  in  the  Navy.  The  Report 
pointed  out  that  the  outlay  of  this  money  had  not 
increased  the  value  of  the  ships,  because  they  are 
sold  for  breaking  up,  and  fetch  little  more  than  the 
price  of  old  iron.  "  Your  Committee  cannot  too 
strongly  condemn  so  extravagant  a  policy." 

There  is  one  other  National  Department,  the 
Post  Office,  which  has  so  far  escaped  the  censure  of 
Royal  Commissions  and  Parliamentary  Committees. 
In  fact,  the  Post  Office  is  the  single  instance  of  a 
trading  concern  which  has  been  carried  on  by 
Government  with  some  apparent  measure  of  success. 
And  though  some  Socialists  condemn  it,  others  claim 
it  as  an  example  of  what  Government  might  do  in 
other  kinds  of  trading. 

126 


The  Lesson  of  State  Enterprise 

It  is,  however,  important  not  to  overlook  those 
facts  : — 

1.  That  the  Post  Office  is  an  absolute  monopoly. 

2.  It  has,  in  consequence,  to  preserve  its  monopoly, 
opposed  all  improvements,  such  as  telegraphy  and 
telephones,  until  public  opinion  has  forced  it  to 
recognise  that  the  public  interest  cannot  be  sacrificed 
in  order  that  a  State  department  may  be  free  from 
competition.  When  the  telegraph  and  telephone 
proved  a  commercial  success,  the  Post  Office 
acquired  them. 

3. .  Every  improvement  in  the  Post  Office  has  come 
from  private  individuals  outside  its  establishment. 

4.  The  Post  Office  work  is  mainly  discharged  by 
private  enterprise  ;  the  railways  and  the  steamship 
lines  make  it  what  it  is,  and  without  the  aid  of 
private  effort  the  Post  Office  would  be  a  failure. 

5.  The  Post  Office  has  not  undertaken  a  business 
which  requires  either  manufacture  or  invention  and 
speculation.  "  It  has  made  use  of  existing  and  well- 
known  agencies,  where  the  only  difficulty  was  one  of 
organisation  ;  where  there  were  no  great  experiments 
to  be  made ;  where  there  was  no  risk  of  great 
losses  ;  and  no  hope  of  extraordinary  gains.  .  .  . 
There  is  very  little  of  that  speculative  element  in 
it  which  is  the  life-blood  of  commercial  activity." 
...  It  has  not  avoided  one  peril,  "  the  difficulty  of 
dealing  with  a  large  class  of  servants.  No  one  who 
has  watched  the  pressure  which  the  services  can  bring 
to  bear  on  Government  through  the  medium  of  mem- 
bers of  Parliament  will  undervalue  the  danger."  ^ 

Even  the  Socialists  themselves  are  apt  to  condemn 

^  Farrer,  The  State  in  its  Relation  to  Trade,  p.  134. 

127 


Socialism  in  Local  Government 

Government  departments,  and  local  authorities  too. 
According  to  Mr.  George  Haw,  a  Socialist  writer,  it 
is  not  new  Housing  Acts  that  are  needed  so  much 
as  the  enforcement  of  ''the  sound  remedies  for 
slumdom "  in  the  existing  Acts.  These  remedies 
have  not  been  applied  because  of  "  the  neglect  and 
incompetence  of  the  municipal  bodies,  allied  with 
interested  parties,"  and  "the  neglect  and  incom- 
petence of  the  Local  Government  Board.  Through- 
out several  administrations  that  department  has 
been  the  most  slothful  of  the  many  slothful  depart- 
ments of  the  State.  .  .  .  Why  is  the  law  not  carried 
out  ?  Why  have  the  Public  Health  and  Housing 
Acts  been  dead  letters  as  regards  many  of  their  pro- 
visions in  the  greater  part  of  England  ?  We  are 
forced  back  to  our  starting  point  for  an  answer — The 
neglect  and  incompetence  of  the  local  bodies,  aided 
and  abetted  by  the  neglect  and  incompetence  of  the 
Local  Government  Board.  No  wonder  the  Local 
Government  Board  was  described  in  the  Liberal 
Nation  last  month  as  '  one  of  the  most  reactionary 
departments  in  the  public  service.'  Tlie  present 
Housing  Act  says  the  municipal  bodies  and  the 
Local  Government  Board  '  may  '  get  rid  of  slumdom. 
They  have  not.  The  proposed  Housing  Act  says 
the  municipal  bodies  and  the  Local  Government 
Board  'may'  make  houses  fit  to  live  in,  and 
'  may '  prepare  town-planning  schemes,  and  they 
will  not.  .  .  .  Equally  is  it  the  fault  of  the  sloth- 
ful Local  Government  Board.  As  Canon  Barnett 
put  it  the  other  day  in  the  Daily  News,  referring 
to  the  Poor  Law  inquiries :  '  The  inspectors  of 
the    Local  Government     Board   hold   inquiries    into 

128 


The  Lesson  of  State  Enterprise 

scandals  for  which  they  are  themselves  largely 
responsible.  Why  did  they  not  discover  and  report 
these  matters  years  ago  ?  We  ought  to  have  inde- 
pendent inquiries,  in  which  the  inspectors  are  subjected 
to  examination,  for  it  is  their  perfunctory  inspection 
which  has  allowed  the  growth  of  such  evil.'  ...  All 
over  the  country  the  Local  Government  Board  has 
shirked  its  municipal  duties  as  shamefully  as  it  has 
shirked  its  Poor  Law  duties  !  "  ^ 

Of  course  the  Administrative  Socialist,  as  a  general 
rule,  ignores  this  failure  of  Government  enterprise, 
or  else  he  attributes  the  "  scandals  "  to  "  corruption 
by  contractors  "  ;  though,  as  we  have  seen,  it  is  not 
corruption,  but  incapacity  to  bargain  on  the  part  of 
officials,  that  is  the  chief  failing.  Buying  too  dear 
and  selling  too  cheap  indicate  "irresponsibility,  in- 
difference, and  want  of  intelligence."  A  further 
Socialist  argument  is  that  "  these  services  are  managed 
practically  by  the  permanent  officials,  and  the  result 
is  that  they  are  hardly  distinguishable  from  private 
companies."  ^ 

Seeing  that  Municipal  Trading  Concerns  are 
almost  wholly  in  the  hands  of  permanent  officials, 
there  is  no  distinction  in  that  respect.  In  fact  the 
frequent  elections  to  local  bodies  are  constantly 
changing  the  personnel  of  the  councillors,  and  give 
little  chance  to  them  to  master  the  work  and  to 
check  officials.  The  muUiplicity  of  Municipal  duties, 
too,  tends  to  throw  administration  more  and  more 
under  the  absolute  control  of  officials.  Councillors 
are  simply  flies  on  the  bureaucratic  wheel. 

1  "  Housing  and  National  Neglect."     T/ie  Socialist  Review,  May,  1908. 
-  Suthers,  Mind  Your  Own  Business. 

129  I 


Socialism  in  Local  Government 

Again,  we  may  expect  a  lower  capacity  for  work 
and  less  security  against  neglect  and  corruption 
in  local  authorities  than  in  the  legislature  and  its 
central  departments.  The  local  bodies  and  their 
officials  are  of  inferior  qualifications  as  compared 
with  the  central  government,  and  their  constituents 
are  less  critical,  and  less  interested.  This  inferior 
capacity,  important  as  it  is  in  matters  of  ordinary 
administration,  is  far  more  serious  when  questions 
of  principle  have  to  be  settled.  The  decision  of 
principles  is  falling  more  and  more  into  the  hands 
of  local  authorities  ;  Parliament  is  fast  losing  its 
prerogative. 

No  more  startling  refutation  of  the  theory  that 
every  extension  of  governmental  enterprise  is  accom- 
panied by  an  automatic  growth  of  public  spirit 
sufficient  to  produce  the  highest  efficiency  is  to  be 
found  than  that  afforded  by  the  condition  of  the 
Civil  Service.  After  wading  through  the  Reports  and 
the  evidence  given  before  various  Commissions  and 
Parliamentary  Committees,  and  after  perusing  the 
debates  in  Parliament  upon  the  state  of  the  Civil 
Service,  one  obtains  a  wonderful  picture  of  what  the 
greatest  statesman  of  modern  times,  the  late  Marquess 
of  Salisbury,  described  as  "  the  visible  helplessness 
of  Governments." 

Without  exception,  the  heads  of  departments,  and 
members  of  the  Government,  confess  to  a  general 
lack  of  economy,  to  over-staffing,  and  to  the  un- 
checked pressure  of  members  of  Parliament  in  de- 
fending incompetent  servants,  and  in  securing  higher 
wages  generally.  Lord  Welby,  after  forty  years' 
experience  in  the  Treasury,  fifteen  years   of  which 

130 


The  Lesson  of  State  Enterprise 

were  spent  as  chief  of  the  Finance  Department,  and 
ten  years  as  Permanent  Secretary,  testified  that  the 
theoretical  control  of  the  Treasury  over  national 
expenditure  was  practically  inoperative,  and  was  only 
exercised  spasmodically  when  public  opinion  ran  in 
the  direction  of  economy.  Instead  of  filling  the 
essential  post  of  national  adviser  and  censor  in 
financial  matters,  the  Treasury  is,  in  fact,  as  a  straw 
in  the  wind.  Other  eminent  public  men  confessed 
that  there  was  a  tendency  in  the  general  body  of 
members  of  Parliament  to  advocate  concessions  to 
Civil  Servants.  Sir  J.  E.  Gorst,  M.P.,  stated  to  the 
Select  Committee  on  National  Expenditure,  1902, 
that  from  his  experience  of  the  Public  Service  he 
could  say  there  was  over-staffing  in  all  offices. 
Though  the  Treasury  had  power  to  make  an  inquiry 
into  every  office  to  see  whether  or  not  there  was 
economical  management,  so  far  as  he  knew  that 
power  had  never  been  exercised.  ''  I  think  an^^body 
who  has  any  experience  of  mercantile  offices,  such  as 
a  great  insurance  office,  or  anything  of  that  kind, 
would  be  struck  directly  with  the  different  atmosphere 
which  prevails  in  a  mercantile  office  and  a  Govern- 
ment office."  He  had  "  no  hesitation  in  saying  that 
any  large  insurance  company,  or  any  large  commer- 
cial office  of  any  kind,  is  worked  far  more  efficiently 
and  far  more  economically  than  the  best  of  the 
Departments  of  His  Majesty's  Government."^ 

An  examination  of  the  Reports  of  the  various 
Royal  Commissions  on  the  Civil  Service,  and  the 
Select  Committees  on  the  Post  Office,  show  the 
reason    for    this    inferiority    and    lack    of    economy. 

^  Report  of  Select  Committee  on  A^ational  Expenditure,  1902. 


Socialism  in  Local  Government 

Practically,  the  ruling  idea  has  been,  and  is,  that  a 
Government  employe  has  "  something  very  nearly 
approaching  to  a  freehold  of  provision  for  life." 
There  is  little  incentive  in  chief  officials  to  secure 
the  fitness  and  discipline  which  is  the  life  of  private 
enterprise.  The  political  influence  of  Civil  Servants, 
too,  is  productive  of  inefficiency.  "  We  have  done 
away  with  personal  and  individual  bribery,  but  there 
is  still  a  worse  form  of  bribery,  and  that  is  when 
a  man  asks  a  candidate  to  buy  his  vote  out  of  the 
public  purse."  The  House  of  Commons  dominates 
the  Treasury,  and  the  Civil  Service  is  practically 
master  of  the  House  of  Commons. 

We  have,  therefore,  reflected  on  a  more  advanced 
scale  in  central  government  the  condition  of  things 
which  inevitably  accompanies  municipal  government. 

Turning  to  the  question  of  corruption.  Adminis- 
trative Socialists  generally  contend  that  municipal 
Socialism  "  would  entirely  remove  any  temptation 
to  commit  these  immoral  actions,"  and  that  "these 
corrupt  practices  are  the  direct  product  of  the  in- 
stitution of  private  enterprise."  ^  Now,  so  far  as 
experience  of  recent  London  municipal  scandals 
throws  any  light  upon  the  subject,  in  every  case 
it  was  the  members  of  the  municipal  body  who  were 
the  tempters.  It  was  not  ''  private  enterprise  "  that 
attempted  to  corrupt  the  local  authority  ;  it  was  the 
members  of  the  local  authority  who  blackmailed  the 
contractors.  Moreover,  strangely  enough,  it  was 
the  Progressive-Socialists,  the  advocates  of  Municipal 
Trading,  who  were  the  chief  practitioners  in  cor- 
ruption. 

1  Suthers,  Mind  Your  Own  Business,  pp.  149-50. 
132 


The  Lesson  of  State  Enterprise 

It  does  not  need  much  thought  to  see  that  the 
larger  number  of  commercial  dealings  a  municipality 
has  to  discharge,  the  greater  the  opportunity  for  evil. 
When  a  vast  multitude  of  matters  need  attention, 
a  clear  supervision  by  all  the  councillors  is  im- 
possible. A  hole-and-corner  execution  of  business 
results,  and  irregularities  creep  in. 

Even  if  we  suppose  that  ultimately  private  enter- 
prise will  be  extinguished,  the  viscous,  slimy  trail 
of  corruption  will  still  be  traceable.  Councillors 
and  their  friends  will  manoeuvre  for  advantages,  and 
for  a  larger  share  of  municipal  services  than  is  given 
to  the  general  citizen.  Human  error  and  human 
nature  will  still  exist.  Corruption  will  remain — 
only  in  another  shape.  And  if  we  think  out  the 
question,  we  are  bound  to  conclude  that,  under  a 
complete  system  of  Municipal  Socialism,  corruption 
will  be  far  more  rampant  than  it  is  now. 

Besides  the  malpractices  of  individuals  and  small 
groups,  which,  after  all,  are  mere  flotsam  and  jetsam, 
there  has  to  be  considered  the  larger  and  graver  sort 
of  malpractice  by  parties,  known  as  ''  bribing  the 
electors  "  with  dazzling  promises,  like  "  lower  rents 
in  municipal  houses,"  "cheaper  fares  on  Ihe  trams," 
and  "  lower  water  charges."  Equally  with  the  sordid 
blackmailing  of  contractors  is  this  corruption.  For 
it  may  well  be  that  circumstances  do  not  warrant 
any  such  reductions. 

Our  line  of  investigation  has  elicited  facts  op- 
posed to  the  belief  that  governmental  enterprise, 
either  local  or  general,  can  be  as  efificient  or  pro- 
gressive    as    private    effort.      There    has    been    not 

133 


Socialism  in  Local   Government 

merely     casual     blunders,     but     persistent     failure. 
There    is   a   dismal    average   of   mediocrity.      There 
is  no  higher    plane    to   which  Government   services 
seek  to  rise,  but  a  dead  level  of  inefficiency  to  which 
they  drop.     Accepting  the  Socialist  proposition  that 
"the   test   of   the   perfection  of  Socialist  machinery 
is  just  its  capacity  to  give  to  the  routine  industries 
of  the  community  that  spirit  and  temper  which   are 
the  note  of  the  freest  and  highest  work,"  we  must 
answer  that   the   machinery  of  Government  has  so 
far  proved  to  be  utterly  incapable  of  producing  the 
spirit  and  capacity  to  ensure  "  the  freest  and  highest 
work."     There  is,  in  fact,   much  truth   in   the    sar- 
castic definition  of  public  service,  that  "  the  officials 
labour  as  little  as  possible  to  satisfy  the    wants    of 
the  taxpayers,   and  the  taxpayers  labour  as  hard  as 
possible  to  satisfy  the  wants  of  the   officials."     The 
<' self-interest"    which    Socialists    assert    to    be    the 
keynote    of  private  enterprise   is   reproduced  in  the 
collectivist  system,  only  in  a  different  and  a  more 
demoralising  shape.      In   private   enterprise    the    in- 
terest is  to  attract  public  custom  by  efficient  service  ; 
in  governmental  departments  that  interest  does  not 
exist.      Private  enterprise,  if  it  fails  to  give  a  satis- 
factory  service,    loses   its   customers.       Government 
gives  whatever  service  it  pleases,  and  the  customer 
must  still  pay.      His  only  remedy  is  the  remote  one 
of  raising  a  row  in  Parliament.     Everything  in  the 
hands  of    Government   remains   stationary,  because 
every  State  employ^  relies  on   receiving  his  reward 
for   a   lower   standard    of   service   than    is   given    in 
private    enterprise.       Sometimes    the    spur    of    ad- 
vancing   industry    forces    Government    to     move    a 

134 


The  Lesson  of  State  Enterprise 

stage,  but  it  falls  again  into  torpor  until  it  is  once 
more  spurred  into  advance.  So  the  public  service 
is  dragged  along,  but  always  far  behind  the  real 
level  of  human  advance.  The  greater  the  mass  of 
Government  inertia  which  the  hard-working  indus- 
trial S5^stem  has  to  bear  on  its  shoulders,  the  slower 
must  be  social  progress,  and  the  farther  back  shall 
we  fall  in  the  race  of  nations.  At  present  the 
struggle  has  reached  a  critical  stage.  We  see  the 
spectacle  of  private  industry  threatened  with  ex- 
tinction, driven  into  a  narrower  compass — 

"  While  hard  at  the  nation's  core 
Eats  the  burning  rust  and  weevil " 

of  Administrative  Socialism. 


135 


X 


THE   EFFECT    UPON   NATIONAL 
CHARACTER   AND   PROGRESS 

Other  considerations  are  as  dust  in  the  balance 
beside  the  vital  one  of  the  effect  of  municipal  trade 
upon  national  character  and  progress. 

The  efficiency  of  the  individual  is  the  base  of  all 
progress,  the  social  motive  force  which  moves  nations 
upward  and  onward.  How  can  individual  efficiency 
be  best  secured  ?  There  are  two  schools  of  extreme 
thought,  each  claiming  to  know  the  best  plan.  The 
first  school  believes  in  pure  Individualism — "  a  largely 
developed  .  .  .  industrial  system,  with  a  feeble  regu- 
lating or  governmental  system."  The  second  school 
desires  a  highly-developed  governmental  system — 
State  ownership  and  management  of  industry,  and 
enfeebled  and  limited  Individualism.  Without  enter- 
ing into  too  lengthy  a  discussion  as  to  which  is  the 
wisest  conception  of  Society,  we  may  take  the  mode- 
rate view  that  neither  of  these  schools  of  thought 
is  wholly  right,  but  that  the  truth  lies  in  a  combi- 
nation of  Individualism  and  State  interference,  or 
Government.  The  evils  of  Government  are  thus 
corrected  by  the  virile  forces  of  Individualism,  and 
the  harshness  of  Individualism  is  softened  by  the 
regulative  influence  of  the  State. 

136 


National  Character  and  Progress 

What  is  the  exact  proportion  of  these  antagonistic 
but  complementary  elements  which  will  produce  the 
best  social  state  ?  This  difficult  problem  can  only 
be  answered  after  an  examination  of  the  results  of 
State  action  upon  individuals  as  furnished  by  ex- 
perience. The  facts  present  themselves  in  this  wise. 
Roughly,  when  a  necessity  of  the  whole  community 
becomes  universal  and  uniform,  and  private  enter- 
prise fails  to  supply  the  need,  then  there  is  general 
agreement  that  the  public  want  falls  within  the 
domain  of  Government.  There  is,  in  fact,  a  col- 
lective delegation  of  power  to  officials,  who  are 
remunerated  by  the  collective  contributions  of  each 
member  of  the  community.  It  is  to  be  observed, 
however,  that  this  involves  a  sacrifice  of  efficiency. 
For  the  moment  the  supply  of  a  general  need 
becomes  a  pubhc  service,  the  liberty  and  responsi- 
bility of  the  individual  is  curtailed.  The  primary 
effort  of  the  State  or  Municipality  is  always  to  secure 
a  monopoly  and  to  prevent  competition.  By  this 
means  no  choice  is  left  to  the  citizen  as  to  how 
he  shall  provide  for  his  various  wants.  He  is  given 
by  the  Government  a  rigid,  routine  service.  He 
obtains  not  that  measure  of  service  which  he  deems 
useful,  as  he  did  on  each  occasion  when  he  invoked 
private  aid,  but  just  that  amount  of  help  which  the 
Government  thinks  it  right  and  proper  to  furnish, 
whatever  be  its  quantity  or  quality.  "  He  is  less 
his  own  master  ;  he  is  deprived  to  some  extent  of 
free  will,  he  is  less  progressive,  he  is  less  a  man. 
Not  only  does  he  no  longer  judge  for  himself  in 
a  particular  case,  but  he  has  got  out  of  the  habit 
of   judging    for   himself    in    any    case.     The    moral 

137 


Socialism  in  Local  Government 

torpor  which  thus  gains  upon  him,  gains,  for  the 
same  reason,  on  all  his  fellow-citizens,  and  in  this 
way  we  have  seen  whole  nations  abandon  them- 
selves to  a  fatal  inaction."  ^  Nothing,  indeed,  is 
more  startling  nowadays  than  the  habitual  indiffer- 
ence of  the  people  to  the  services  given  by  many 
important  public  departments. 

This,  then,  is  the  distinction  between  the  effect  of 
State  and  private  enterprise.  All  the  human  faculties 
— comparison,  judgment,  and  foresight — remain  in 
exercise  under  the  reign  of  choice,  or  private  enter- 
prise. Under  the  Hobson's  choice  of  State  service  the 
reverse  is  the  case.  The  importance  of  preserving 
a  large  field  of  discretion  is  seen  when  we  know  that 
every  right  choice  brings  its  reward,  and  every  mis- 
taken one  its  punishment.  This  disciplinary  ex- 
perience improves  the  individual,  and  is  a  prime 
condition  of  progress. 

Now,  with  the  extension  of  State  service,  and  the 
consequential  limitation  of  the  freedom  of  choice, 
not  only  is  the  ability  of  the  citizen  lessened,  but 
the  loss  of  responsibility  becomes  a  fatal  temptation 
to  abandon  other  responsibilities.  He  begins  to 
look  upon  the  State  as  a  thing  apart  from  himself, 
as  consisting  of  a  set  of  individuals  who  are  pro- 
viding him  with  certain  needs  for  which  he  is  not 
paying.  Accustomed  to  expect  everything  from  the 
Government,  he  never  accuses  it  of  exceeding  its 
various  obligations,  but  is  continually  grumbling 
because  it  does  not  do  enough.  By  a  combination 
with  his  fellow-citizens  of  similar  cast  of  mind  the 
Government  is  overthrown,  and  replaced  by  another 

^  Harmonies  of  Political  Economy,  Bastiat,  p.  432. 
138 


National  Character  and  Progress 

which  has  obtained  power,  not  by  promising  to  do 
less,  but  to  do  more.  So  the  invasion  of  private 
territory  by  Government  enterprise  is  gradually  and 
ceaselessly  persistent. 

Of  course,  it  may  be  said,  with  some  force,  that 
this  ehmination  of  the  faculty  of  choice  from  many 
departments  of  life  is  a  relief  in  our  complex  modern 
existence,  that  the  smooth  routine  of  automatic  ser- 
vice saves  worry  and  leaves  men  free  to  devote 
their  energies  to  other  matters,  and  that  this  is  all 
pure  advantage.  That  contention  is  sound  only  up 
to  a  certain  point.  We  have  to  maintain  a  due 
equilibrium.  It  is  a  question  of  balance.  Beyond  a 
certain  degree,  the  abolition  of  choice  is  an  unmixed 
evil. 

We  can  tell  by  an  easy  test  when  we  have  reached 
the  perilous  stage  which  marks  the  loss  of  equili- 
brium. The  test  is  this: — Is  or  is  not  the  citizen 
beginning  to  lose  faith  in  himself,  and  to  look  to 
the  State  as  father  and  mother  of  all  ?  Applying  that 
test,  it  cannot  be  disputed  that  in  our  country  at  least 
this  child-like  conduct,  this  loss  of  self-reliance,  has 
become  most  marked  during  the  past  two  decades. 
There  has  been  a  strong  movement  against  the 
prominent  feature  of  all  successful  nations  ;  the  high 
and  constant  rivalry  of  life,  the  intensity  of  energy, 
and  the  wide  freedom  which  are  characteristic  of 
the  British  race  is  now  decried.  The  individual 
is  becoming  more  and  more  subordinate  to  and 
dependent  upon  Society.  Indeed,  the  Administra- 
tive Socialist  hails  this  change  as  a  sign  of  the 
growth  of  Socialism.  He  glories  in  it.  He  terms 
it    "  readjustment    of    the    social    environment."      It 

139 


Socialism  in  Local  Government 

is,  at  the  present  time,  impossible  for  the  student 
of  social  conditions  to  escape  noticing  the  sharp 
contrast  between  the  Socialist  ideal  and  the  real 
outcome  of  Socialist  practice.  Stated  briefly,  the 
Socialist  scheme  of  Society  claims  the  attention  of 
all  because  it  promises  to  secure  the  highest  degree 
of  social  efficiency.  In  practice  it  tends  irresistibly 
towards  an  aim  which,  as  a  recent  writer  insists,  can 
never  be  made  consistent  with  its  first  ideal.  That 
lower  realisation  is  "  the  maximum  of  ease  and 
comfort  with  the  minimum  of  effort  for  the  greatest 
possible  number  of  the  existing  population "  ^ — an 
object  which  is  far  from  social  efficiency,  and  which 
spells  retrogression. 

The  conclusion,  therefore,  to  which  we  are  driven 
is,  that  the  balance  between  Individualism  and  State 
action  has  been  upset  by  the  introduction  of  muni- 
cipal trade.  We  have  entered  upon  a  grim,  barren 
region  of  human  stagnation,  where  reigns  a  steady 
decay  of  all  the  faculties  making  for  the  good  de- 
velopment of  the  race.  In  our  effort  to  fulfil  "the 
duty  of  providing  such  an  environment  for  individual 
men  and  women  as  to  give  all,  as  far  as  possible,  an 
equal  chance  of  realising  what  is  best  in  their  in- 
tellectual and  moral  natures,""^  we  have  given  them 
the  chance  to  realise  what  is  worst  in  themselves, 
and  they  are  doing  it.  Effort  is  stunted,  intelligence 
weakened,  and  responsibility  destroyed.^ 

1  B.  Kidd,  p.  349- 

^  Ritchie,  Principles  of  State  Interference,  p.  149. 

2  Although  we  are  here  discussing  only  one  line  of  Socialist  advance,  it 
is  in  the  highest  degree  important  to  note  the  significance  of  the  Socialist 
conception  of  the  State.  Karl  Marx,  and  the  general  body  of  modern 
Socialists,  conceive  a  materialist  State  "  containing  within  itself  the  whole 
theory  of  human  ends  and  interests."     The  result  is  that  all   Socialist 

140 


National  Character  and  Progress 

Invention. — In  Fabianism  and  the  Empire,  a  mani- 
festo issued  by  the  Fabian  Society  in  1900, 
"the  next  Government"  is  urged  "to  enlarge  the 
powers  of  local  bodies  until  they  are  able  to  force 
private  enterprise  into  its  proper  sphere,  which  is  not 
the  exploitation  of  common  needs  and  ascertained 
processes,  but  the  sphere  of  invention,  initiative,  and 
the  creation  of  new  needs  and  new  industries."  In 
short,  the  Administrative  Socialist  admits  the  in- 
adequacy and  inefficiency  of  Socialism,  and  looks 
to  Individualism  to  supply  the  means  of  progress. 
We  are  invited  to  constitute  a  social  condition  which 
may  be  described  as  a  "  compound  of  Socialistic  som- 
nolence and  individual  diligence."  It  needs  but  a 
moment's  reflection  to  arrive  at  the  conclusion  that 
individual  diligence  would  be  swamped  by  Socialistic 
inertia  and  obstinate  obstruction  to  the  introduction 
of  improvement.     "Ascertained  processes"  are  never 

thought  and  action  is  directed  towards  the  undue  elevation  of  "the 
State"  into  a  sort  of  world-God,  ahnighty  and  all-persistent.  To  quote 
JVI.  Paul  Leroy-Beaulieu:  "The  State  is  the  only  God  of  the  modern 
world"  {The  Modern  State  and  its  Fioutions,  p.  l8).  And  as  Mr. 
Benjamin  Kidd  rightly  declares,  "  A  condition  of  Social  Democracy, 
founded  on  the  materialistic  interpretation  of  history,  carries  with  it,  in  its 
own  bosom,  its  own  answer  and  its  own  final  criticism." 

The  reply  of  the  Socialists  to  this  argument  is  that  they  are  fighting  the 
gross  materialism  of  the  capitalist  forces,  who  act  upon  the  principle  that 
might  is  right,  and  that  human  society  is  without  a  soul. 

To  this  our  final  answer  is,  that  we  must  lift  society  towards  a  finer  and 
a  higher  conception  of  social  progress.  We  must  strengthen  "  the  spiritual 
isolation  of  the  individual,  resulting  in  due  course  in  the  projection  of  the 
individual's  sense  of  final  responsibility  outside  all  institutions  and  systems 
of  authority  organised  in  the  political  State,  and  even  outside  the  State 
itself."  That  spiritual  isolation  "  has  been  the  cause  which  has  made  for 
the  highest  and  most  organic  type  of  socialisation  that  has  been  reached  in 
the  world.  It  is  the  cause  which  is  making  for  the  truest  and  most  organic 
form  of  Socialism,  between  which  and  the  Socialism  which  seeks  to  impose 
again  upon  us,  through  the  State,  as  the  final  authority,  the  absolutisms 
of  the  interests  and  opinions  of  those  at  present  comprised  in  it — there  is  a 
world  of  difi'erence  "  (Kidd). 

141 


Socialism  in  Local  Government 

permanent.  It  is  only  through  the  appHcation  of 
discovery  to  them  that  progress  is  made.  Under 
SociaHsm,  the  sphere  of  invention  would  be  mere 
prison  space,  and  initiative  would  perish  for  lack  of 
use.  It  is  only  by  the  persistence  of  individuals  that 
innovation  is  made  against  the  powerful  opposition 
of  popular  opinion.  Few  can  recall  the  crisis  in  the 
life  of  James  Watt,  the  inventor,  "an  illustrious 
follower  of  science  and  a  real  benefactor  to  the 
world,"  when  popular  prejudice  fought  against  him. 
Coming  to  London  in  1775,  he  found  himself  barred 
from  starting  in  business  owing  to  the  municipal 
trade  regulations.  Returning  to  Glasgow,  the  Cor- 
poration refused  to  him  "  the  right  to  open  even  the 
most  humble  workshop,"  and  it  was  left  to  the 
University  of  Glasgow,  which  was  not  subject  to  the 
municipal  jurisdiction,  to  set  at  Watt's  disposal  a 
small  apartment  wherein  to  work  at  his  inventions. 
Again,  the  introduction  of  the  railways  and  machinery 
evoked  a  sturdy  resistance.  The  history  of  Govern- 
ment enterprise  is  one  long  fight  against  innovation. 
Assuming  public  and  private  oil  lighting  under  a 
Socialist  National  Lighting  Board,  what  chance  would 
be  afforded  to  any  individual  enterprise  to  introduce 
gas  ?  Or  what  individual  would  have  troubled  to 
discover  the  new  process  ? 

Our  past  experience  does  indeed  teach  us  that  the 
opposition  to  industrial  progress  and  invention  pre- 
sented by  municipal  trade,  or  by  legislation  passed 
on  its  behalf,  is  a  formidable  one.  The  relation  of 
the  State  to  trade,  more  particularly  in  connection 
with  the  regulation  of  total  or  partial  monopolies, 
has    been    the    subject    of    long    controversy.      The 

142 


National  Character  and  Progress 

discussion  has  raged  chiefly  around  the  nature  of  the 
restriction  with  which  the  legislature  has  thought 
fit  to  surround  the  operations  of  private  trading  in 
regard  to  tramway  and  electricity  supply.  In  a 
smaller  degree,  the  attitude  of  Government  towards 
telegraph  and  telephone  services  has  been  severely 
criticised. 

The  need  for  a  proper  governmental  control  of 
semi-monopoly  undertakings  owned  and  managed  by 
large  private  companies  has  never  been  seriously 
disputed.  The  ground  of  objection  is  that  the 
regulations  and  limitations  imposed  upon  such  under- 
takings have  been  ill-devised,  and  have  resulted  in — 

1.  Crippling  the  progress  of  the  trade  in  question. 

2.  Preventing  improvement  and  invention. 

It  is  necessary,  before  examining  some  instances, 
to  point  out  that  the  imposition  of  restrictions  is 
certain  to  entail  some  evil  results.  In  safeguarding 
public  interest,  it  may  happen  that  the  door  is  shut, 
bolted,  and  barred  against  what  might  have  proved 
to  be  excellent  expansion.  Again,  it  is  unfortunate, 
but  too  true,  that  restriction  involves  a  certain  sense 
of  irresponsibility.  As  an  ex-Permanent  Secretary 
of  the  Board  of  Trade  has  well  observed,  in  State 
regulation  of  trade  "  It  is  impossible  at  once  to 
dictate  to  a  man  what  he  shall  do,  and  to  hold  him 
responsible  for  the  consequences.  .  .  .  You  may 
have  the  responsibility  of  the  State  or  the  responsi- 
bility of  the  private  person,  but  you  cannot  have 
both.  The  adoption  of  the  one  forces  you  to 
abandon  the  other.  .  .  .  This  is  not  a  matter  of 
mere  speculation,  but  of  practical  experience,  as  is 
shown  by  the  failure  of  repeated  attempts  to  procure 

143 


Socialism  in  Local  Government 

convictions  for  the  crime  of  sending  unseaworthy 
ships  to  sea,"  because  they  have  passed  the  ordeal 
of  Government  supervision.  The  same  writer  points 
out  that  regulations  enforced  by  law  produce  a  gain 
often  more  apparent  than  real.  Uniformity  is  secured, 
but  a  low  average  of  results.  "  It  is  what  the  worst 
man  in  the  trade  can  be  compelled  to  do,  not  what 
the  best  men  would  do  if  left  to  themselves.  For 
the  motives  of  self-interest,  of  gain,  of  character, 
and  of  individual  liability,  a  general  and  compulsory 
rule  is  substituted.  The  worst  men  will  be  made 
better,  but  the  best  men  will  probably  become  worse, 
and  will  act  down  to  the  rule."^ 

The  practical  consequence  of  mistaken  State 
regulation  is  seen  in  its  fullest  significance  in  the 
case  of  tramways  and  electricity.  The  contrast 
between  the  period  before  1870  and  after  that  date 
in  the  matter  of  inventions  is  remarkable.  Prior  to 
1870,  in  the  first  stages  of  practical  engineering,  the 
field  of  British  industry  was  fruitful  of  inventiveness. 
Since  then  there  has  been  little  or  nothing  of  im- 
portance produced  by  British  inventors  as  com- 
pared with  foreign  achievements.  What  has  been 
the  cause  of  this  sterility  of  the  originative  faculty  ? 
Is  it  not  to  be  found  in  the  unfortunate  influence 
of  legislative  limitations  placed  upon  tramway  and 
electrical  enterprise  at  the  instance  of  municipal 
authorities  ? 

Tramways. — It  is  generally  supposed  that  the 
Tramways  Act  of  1870  marks  the  introduction  of 
that   form   of   locomotion   into   this    country.     As  a 

^   The  State  in  its  Relation  to  Trade,  Farrer. 
144 


National  Character  and  Progress 

matter  of  fact,  so  far  back  as  1858  the  first  request 
to  Parliament  for  permission  to  lay  down  tram  lines 
in  London  was  refused.  Sometimes  with,  and  more 
often  without,  the  sanction  of  Parliament,  various 
lines  were  built  in  some  parts  of  the  United  Kingdom. 
The  opposition,  however,  of  municipalities  and  Parlia- 
ment hindered  serious  progress.  In  1870,  no  less  than 
twenty-seven  companies  sought  Parliamentary  powers 
to  construct  over  515  miles  of  tramways.  The 
local  authorities  offered  strenuous  opposition,  on  the 
ground  that  "  they  were  prepared  themselves  to 
undertake  the  cost  of  laying  down  and  repairing 
the  tramways,  and  of  letting  them  on  lease "  to 
private  companies.  This  state  of  affairs  led  to  the 
passing  of  the  Tramways  Act  of  1870,  which  practi- 
cally placed  the  control  of  tramway  development  in 
the  hands  of  the  local  authorities.  Not  only  was 
the  responsibility  for  extension  left  to  them,  but  it 
was  enacted  that  the  local  authorities  should  have  the 
right  of  purchase  of  private  companies'  works  after 
twenty-one  years  on  payment  of  the  structural  value 
of  the  undertaking.  There  was  to  be  no  payment 
for  good-will.  An  unsuccessful  attempt  was  made 
by  the  tramway  interest  to  secure  an  additional  30 
per  cent.,  on  the  ground  that  twenty-one  j'ears  was 
not  a  sufficient  time  to  enable  a  company  to  build 
up  the  business,  and  to  recoup  the  losses  incurred 
in  the  early  years  ;  and  that  the  structural  value  of 
the  tramway  might  decrease  owing  to  the  price  of 
materials  being  lower  at  the  end  of  the  lease. 

It  was  generally  felt  that  the  action  of  Parliament 
was  injurious,  and  that  private  tramway  enterprise 
had    been    crippled   by   these    restrictive   provisions. 

145  '  K 


Socialism  in   Local  Government 

In  consequence,  the  growth  of  tramways  was  small 
in  the  next  ten  years.  In  1880  only  386  miles  of 
lines  had  been  built  in  the  United  Kingdom,  though, 
be  it  noted,  the  companies  had  in  1870  applied  to 
Parliament  for  permission  to  construct  over  515 
miles  of  tramways.  In  1890,  the  line  mileage  was 
only  948  miles.  Compared  with  other  countries, 
the  United  Kingdom  was  badly  served.  Undoubtedly, 
this  unfortunate  state  of  things  was  solely  due  to 
the  unwise  restrictions  of  Parliament  which  dis- 
couraged private  traders. 

Shortly  after  1890  the  application  of  electricity 
to  tramways  came  within  the  sphere  of  practicability. 
However,  as  the  existing  companies  had  a  very  short 
lease  of  life  left  under  the  twenty-one  years'  clause 
of  the  Act  of  1870,  and  the  cost  of  conversion  to 
electric  traction  was  enormous,  it  could  not  be  ex- 
pected that  the  old  horse  tram  companies  would 
apply  the  new  invention  unless  a  guaranty  was  given 
that  a  further  extension  of  time  would  be  allowed 
to  enable  them  to  recoup  themselves  for  the  outlay. 
No  such  guaranty  was  forthcoming.  In  fact,  feeling 
in  favour  of  municipal  ownership  and  management 
had  developed  so  strongly,  that  private  enterprise 
was  prevented  from  embarking  upon  new  ventures. 
In  1894  only  975  miles  of  tram  lines  were  open 
for  public  tralBc,  an  increase  of  27  miles  in  four 
years. 

It  is  to  be  observed  that  though  the  local  autho- 
rities in  1870  had  secured  an  Act  which  hampered 
private  enterprise,  very  little  work  was  done  by  the 
local  bodies  themselves.  By  1891  they  had  built 
only  255   miles  of  tramways.     Of  course,  after  that 

146 


National  Character  and  Progress 

date,  the  companies  began  to  come  under  the  opera- 
tion of  the  purchase  clause  of  the  Act  of  1870,  and 
their  Hnes  passed  gradually  into  the  possession  of 
the  local  authorities.  The  only  chance  left  to  pri- 
vate companies  was  afforded  by  the  Light  Railways 
Act  of  1896.  At  the  end  of  1906  the  tramway 
statistics  of  the  United  Kingdom  gave  the  following 
information : — 

Miles. 

Tramways,  &c.,  belonging  to  local  authorities        .     1571 

„  „  „  companies         .         .       823 

Total    .         .     2394 

The  inherent  vice  of  all  Government  trading — 
its  failure  to  contribute  to  the  growth  of  a  novel 
industry — has  been  prevalent  in  tramway  enterprise. 

Of  the  conditions  in  the  Tramwa^^s  Act,  1870, 
which  practically  destroyed  private  effort,  the  power 
of  local  veto  vested  in  the  local  authorities  was  a 
formidable  barrier  to  companies.  If  a  local  body 
would  not  consent  to  the  construction  of  a  tramway 
in  its  district  there  was  no  appeal  from  its  decision. 
This  power  of  veto  was  extensively  used  and  limited 
tramway  enterprise  to  a  considerable  extent.  Various 
attempts  were  made  to  induce  Parliament  to  make 
this  absolute  veto  less  arbitrary.  In  1902,  an  amend- 
ment to  Standing  Order  No.  22,  giving  the  Private 
Bill  Committee  power  to  inquire  whether  the  consent 
of  a  local  authority  had  been  unfairly  withheld,  and  to 
report  accordingly,  was  opposed,  mainly  at  the  instance 
of  the  Association  of  Municipal  Corporations,  a  power- 
ful body  consisting  of  representatives  of  municipali- 
ties. The  ground  of  objection  was  that  the  repeal  of 
the  veto  "  must  be  to  increase  the  number  of  private 

147 


Socialism  in  Local  Government 

enterprises  in  boroughs  and  towns."  The  door  was 
not  to  be  opened  "  wider  to  this  kind  of  private 
enterprise."  The  amendment  of  the  power  of  veto 
was  withdrawn.  The  Royal  Commission  on  London 
traffic  had  also  recommended  the  abolition  of  this 
local  veto,  but  so  far  no  Government  has  been  able 
to  resist  the  powerful  opposition  of  the  vested  in- 
terests of  the  municipal  authorities. 

The  belief  that  tramway  companies  would  earn 
large  profits  has  been  falsified  by  experience.  The 
average  net  earnings  of  the  undertakings  has  been  a 
Httle  over  5  per  cent.  Out  of  that  sum  has  had  to 
be  provided  sinking  fund  and  depreciation  charges, 
as  well  as  the  dividend  on  capital. 

With  the  application  of  electric  traction  to  tram- 
ways about  1890,  we  enter  upon  another  phase  of 
legislative  restriction.  The  Electric  Lighting  Act  of 
1882  limited  electrical  companies  to  a  franchise  of 
twenty-one  years,  with  the  result  that  the  electrical 
industry  was  hampered  in  its  growth.  Consequently 
private  companies  were  loth  to  lay  down  electric 
tramways. 

It  is  noteworthy  that  the  municipalities  them- 
selves now  admit  that  electric  tramways  could  not  be 
profitably  constructed  under  the  twenty-one  years' 
franchise  of  the  Act  of  1870.  With  the  extension 
of  municipal  lines  into  other  districts  this  fact  was 
realised,  and  in  1901  the  Standing  Orders  of  Par- 
liament were  amended  to  permit  a  local  authority  to 
run  its  lines  into  the  area  of  an  adjoining  local  autho- 
rity, and  the  period  for  purchase  was  fixed  at  not 
exceeding  forty-two  years.  Mr.  J.  W.  Lowther,  the 
Chairman  of  Committees  in  the  House  of  Commons, 

148 


National  Character  and  Progress 

speaking  upon  the  proposed  alteration,  said :  "  It 
has  been  found,  especially  in  the  case  of  electric 
tramways,  that  twenty-one  years  is  not  a  sufficient 
period.  ...  In  1870,  when  the  Tramway  Act  was 
passed,  twenty-one  years  was  taken  as  the  life  of  a 
tramway.  ...  At  the  present  time  many  corporations 
are  laying  down  electric  tramways,  and  the  expense 
connected  with  the  installation  of  these  is  so  large 
that  it  has  been  found  not  to  be  worth  while  to  lay 
them  down  unless  for  an  extended  period.  If  they 
have  to  sell  them  at  the  end  of  twenty-one  years  they 
are  losers  by  the  transaction."  ^ 

There  is  no  more  excellent  example  of  the  selfish 
attitude  of  the  municipalities  than  this  question  of 
the  tramway  franchise.  For  the  private  companies, 
twenty-one  years  was  an  insufficient  period.  Yet 
the  municipalities  strenuously  opposed  all  attempts 
to  extend  the  time.  When  the  municipal  authorities 
owned  tramways  themselves,  then  they  sought  and 
obtained  for  themselves  an  extension  of  franchise 
from  Parliament. 

In  fact,  no  one  can  rise  from  the  study  of  the  con- 
flict between  the  local  authorities  and  the  tramway 
companies  without  feeling  that  the  prime  motive 
force  behind  the  action  of  the  local  authorities  was 
to  place  private  enterprise  in  fetters,  to  deny  it  the 
ordinary  justice  which  it  ought  to  expect  from  Govern- 
ment, and  then  to  complain  of  its  lack  of  progress, 
and  make  that  the  excuse  for  municipal  trading. 

Electricity  Supply. — The  history  of  electricity  supply 
in  the  United   Kingdom  is,  in  the  main,  a  repetition 

1  Hansard,  March,  1901,  p.  45. 
149 


Socialism  in  Local  Government 

of  the  case  of  the  tramways.  When  the  electrical 
industry  had  so  far  advanced  as  to  promise  com- 
mercial success,  Parliament,  at  the  instance  of  the 
local  authorities,  who  were  largely  "prejudiced  by 
being  the  owners  of  gas  undertakings,"  stepped  in 
and  placed  it  under  severe  restrictions.  By  the 
Electric  Lighting  Act  of  1882  the  twenty-one  years' 
compulsory  sale  clause  was  applied  to  companies. 

In  the  light  of  after  experience,  it  is  interesting  to 
read  the  reasons  urged  in  Parliament  for  imposing 
limitations  upon  electrical  companies.  The  then 
President  of  the  Board  of  Trade  said  one  of  the 
objects  of  the  Bill  was  "  that  no  obstacle  should  be 
placed  in  the  way  of  the  development  of  the  electric 
light "  ;  another  member,  representing  Manchester, 
which  owned  a  great  gas  undertaking,  thought  that 
local  authorities  "  must  necessarily  be  the  best  judges 
of  what  was  good  in  such  matters  as  lighting.  He 
did  not  deem  it  to  the  public  interest  necessarily  that 
outside  companies  should  be  invited  to  come  in  and 
make  an  exploitation  ground  for  an  area  which  had 
already  been  supplied  (with  gas  lighting)  on  the  most 
favourable  and  economical  terms  by  existing  local 
authorities.  .  .  .  He  did  not  see  why  outsiders  should 
be  let  in  to  make  happy  hunting  grounds  of  the 
corporation  area."  The  Bill  was  passed  by  the 
House  of  Commons  with  only  fifteen  years  as  the 
term  during  which  a  company  might  exist  before 
becoming  subject  to  purchase  by  the  local  authority. 
The  House  of  Lords  amended  the  Bill  and  made  the 
period  twenty-one  years.  In  spite  of  its  supposed 
lack  of  business  knowledge,  the  House  of  Lords 
seems  to  have  more  accurately  gauged  the  risks  than 

150 


National  Character  and  Progress 

the  business  members  of  the  Lower  House.  The 
Marquess  of  Sahsbury  said  "  the  terms  offered  to  the 
electric  companies  were  not  quite  fair.  As  the  matter 
stood,  those  companies  would  have  to  carry  on  their 
undertakings  with  the  full  consciousness  that  all  the 
risks  would  be  theirs,  and  all  the  profits  would  go  to 
the  public — that  was  to  say,  if  they  failed,  no  one 
would  come  forward  to  help  them,  and  if  they  suc- 
ceeded, the  municipality  would  step  in  and  sweep  up 
all  the  benefits.  The  noble  Earl  opposite  had  said, 
in  defence  of  the  policy  of  the  Bill,  that  they  should 
be  very  cautious  on  behalf  of  the  public.  For  his 
part,  he  apprehended  that  their  first  duty  was  to  con- 
sult the  interests  of  the  public,  not  by  thinking  merely 
of  the  profits  which  the  municipality  might  or  might 
not  make  some  fifteen  years  hence,  but  by  thinking 
how  some  good  would  come  to  the  consumers  of  an 
article  which  would  benefit  them  enormously.  It 
was  the  public  which  would  suffer  if  these  com- 
panies were  not  allowed  to  come  into  the  field,  and 
if  this  new  instrument  of  power,  which  science  had 
discovered,  were  compelled  to  remain  useless  and 
unfruitful  for  several  years."  ^ 

There  could,  indeed,  have  been  no  more  foolish 
policy  than  that  embodied  in  the  Act.  Unlike  horse 
tramways,  electricity  was  in  an  experimental  stage, 
and  needed  the  widest  freedom  and  a  large  practical 
experience  before.it  could  be  brought  to  full  efficiency. 
The  business  was  purely  speculative.  The  result  of 
this  unwise  legislation  was  that  in  six  years  after  the 
passing  of  the  Act  there  was  not  a  single  electric 
light  company  in  the  whole  country  that  used  the 

1  Hansard,  1882,  p.  575. 
151 


Socialism  in  Local  Government 

public  streets  for  distributing  electric  power  and 
light.  Meantime,  other  countries  had  made  rapid 
progress,  both  in  regard  to  electric  lighting  and  in 
the  application  of  electric  traction  to  tramways. 
Ultimately,  Parliament  was  forced  to  recognise  the 
folly  of  the  Act  of  1882,  and  by  an  amending  Act  of 
1888,  the  period  of  twenty-one  years  was  doubled, 
in  spite  of  the  fact  that  the  municipal  authorities 
offered  strong  opposition  to  any  longer  period  than 
thirty  years.  It  cannot  be  said  that  the  extended 
period  is  wholly  just  either  to  the  companies  or  to 
the  consumer,  but  nevertheless  the  amendment  was 
a  vast  improvement  upon  the  former  provision. 

The  records  of  Parliament,  and  of  local  authorities 
between  1880  and  1900,  are  strewn  with  Reports 
of  Committees  upon  various  Electric  Lighting  Bills. 
Among  this  mass  of  dry  documentary  evidence, 
"  antique,  buried  in  rubbish,  old  and  musty,"  into 
which  the  student  may  delve  with  profit,  there  exists 
some  startling  facts  as  to  the  general  incompetence 
of  local  authorities  to  either  appreciate  the  need  for 
promoting  the  development  of  new  inventions  by 
private  enterprise,  or  to  efficiently  undertake  such 
work  themselves.  The  evidence  of  Sir  T.  Farrer 
(afterwards  Lord  Farrer),  Secretary  to  the  Board  of 
Trade,  before  a  Committee  on  Electric  Lighting 
Provisional  Orders  Bill,  1883,  contains  a  statement, 
remarkable  because  it  is  the  opinion  of  an  official 
who  was  usually  antagonistic  to  private  traders,  and 
who  had  exceptional  facilities  for  judging  of  the 
capabilities  of  local  bodies.  The  statement  was  to 
the  effect  that  the  Board  of  Trade  "  felt  that  whilst 
local    authorities    represented    the    ratepayers,    they 

152 


National  Character  and  Progress 

were  in  many  cases  inert  bodies  not  willing  to 
adopt  new  things,  in  some  cases,  perhaps,  pre- 
judiced by  being  the  owners  of  gas  undertakings, 
and,  therefore,  not  by  any  means  certain  in  all 
cases  to  give  the  ratepayers  the  benefit  of  this 
new  invention."  He  further  stated  that  "  all  ex- 
perience in  this  country  shows  that  whilst  capital 
is  extremely  active  and  will  always  support  a  new 
invention,  if  there  is  a  prospect  of  success,  there 
is  no  such  active  motive  power  upon  the  part  of 
governing  bodies  ;  they  take  up  a  thing  when  it 
is  done,  but  they  are  not  persons  generally  willing, 
nor  perhaps  are  they  the  best  persons,  to  take  up 
a  new  invention." 

How  true  was  that  opinion  is  seen  from  a  short 
review  of  the  attitude  of  local  authorities  towards 
electrical  undertakings.  The  case  for  private  enter- 
prise and  for  municipal  action  was  fully  presented 
before  a  Select  Committee  of  the  House  of  Lords, 
which  sat  in  1886  to  consider  and  report  upon 
three  Bills  introduced  with  the  object  of  improving 
the  Electric  Lighting  Act  of  1882.  A  considerable 
amount  of  evidence  was  given  by  the  representatives 
of  the  electrical  industries,  financiers,  and  officials 
of  the  Board  of  Trade,  and  the  local  authorities. 
Upon  the  question  why  there  had  been  a  general 
failure  to  establish  the  use  of  electricity  in  the 
United  Kingdom,  Professor  Forbes,  an  eminent 
scientist,  was  strongly  of  opinion  that  the  Act  of 
1882  had  killed  the  industry  of  lighting  from  central 
stations.  Mr.  W.  H.  Preece,  Electrician  to  the  Post 
Office,  said:  "The  advance  that  has  been  made  in 
our  knowledge  of  the  scientific  principles  underlying 

153 


Socialism  in  Local  Government 

electric  lighting  has  been  very  great,  but  in  practice 
the  development  of  the  industry  has  been  slow." 

Sir  Frederick  Bramwell,  one  of  our  foremost 
engineers,  stated  :  "  I  attribute  the  failure  to  make 
greater  use  of  electricity  in  the  country  entirely  to 
the  Act  of  1882." 

Leading  financiers  also  gave  evidence  to  the  effect 
that  the  Act  of  1882  prevented  investors  from  em- 
barking their  capital  in  electrical  concerns. 

The  evidence  of  witnesses  on  behalf  of  the  muni- 
cipalities was  directed  against  any  extension  of  the 
limited  period  under  the  Act  of  1882,  beyond  thirty 
years.  It  was  suggested  that  there  was  no  scope  for 
electrical  companies  ;  that  if  electricity  really  could 
compete  with  gas,  then  the  municipalities  would  take 
it  up,  and  companies  would  not  be  necessary.  But 
as  to  who  was  going  to  experiment,  if  private  enter- 
prise did  not  venture,  nothing  was  said. 

The  most  extraordinary  testimony  of  all,  was  that 
tendered  by  Sir  Henry  Calcraft,  Permanent  Secretary 
to  the  Board  of  Trade.  In  answer  to  the  question 
whether  it  was  not  just  that  a  company  should  reap 
the  benefit  of  a  speculative  venture  into  which  the 
municipality  was  afraid  to  enter,  this  witness  thought 
the  public  rather  than  the  company  ought  to  have 
the  advantage.  Lord  Rayleigh  eventually  remarked  : 
"The  whole  of  your  argument  seems  to  come  to 
this — that  it  is  less  important  that  the  public  should 
have  light,  than  that  the  companies  should  not  make 
profits." 

Besides  the  great  influence  which  the  local  autho- 
rities ignorantly  threw  against  any  fair  treatment 
of   private    electrical   enterprise   by    Parliament,   the 

154 


National  Character  and  Progress 

clause  in  the  Electric  Lighting  Acts  relating  to  the 
issue  of  Provisional  Orders,  "  authorising  any  local 
authority,  company,  or  person  to  supply  electricity," 
was  used  to  block  progress.  The  practice  of  the 
local  authorities  was  to  obtain  a  Provisional  Order 
from  the  Board  of  Trade,  and  then  fail  to  set  up  any 
electricity  supply.  While  the  local  authority  held 
the  Order,  no  company  could  establish  a  business 
in  its  area.  The  evidence  given  before  the  Joint 
Select  Committee  upon  Municipal  Trading,  1900, 
showed  conclusively  that  this  procedure  was  adopted 
by  local  bodies  to  protect  municipal  gas  works  from 
competition.  Figures  and  facts  are  quoted  to  prove 
that  many  municipalities  were  pursuing  a  dog-in-the- 
manger  policy.  It  is  true  that  the  Board  of  Trade 
had  power  to  cancel  the  Order  if  the  holder  of  it 
failed  to  supply  electricity  within  a  specified  time, 
but  this  power  was  seldom  used  against  local  autho- 
rities until  after  1900. 

At  the  end  of  1904  the  Parliamentary  Returns 
showed  that  294  local  authorities  had  established 
electrical  works.  In  105  instances,  five  to  sixteen 
years  had  elapsed  between  the  obtaining  of  the  Pro- 
visional Order  and  the  supply  of  electricity.  In  the 
case  of  133  companies,  no  less  than  123  had  started 
supplying  electricity  within  three  years  of  the  issue 
of  the  Order. 

By  1907  the  number  of  Provisional  Orders  and 
Licenses  granted  to  local  authorities,  which  had  been 
revoked  by  the  Board  of  Trade  owing  to  non-user, 
was  no.  Many  of  these  Orders  had  been  held  for 
six,  seven,  and  even  ten  years  without  any  works 
having  been  started.     At  the  same  date  about  160 

15s 


Socialism  in  Local  Government 

Orders  and  Licenses  granted  to  Companies  had  also 
been  revoked,  but  in  only  five  cases  had  more  than 
three  years  elapsed  before  revocation.  It  is  note- 
worthy that  previous  to  1900  the  Board  of  Trade 
had  made  it  a  practice  to  allow  a  local  authority 
seven  years  in  which  to  establish  works,  but  had 
allowed  private  companies  much  less  scope. 

Electric  Bulk  Supply.  —  Incalculable  as  was  the 
damage  wrought  upon  the  general  industrial  progress 
of  the  country  through  this  internecine  war  waged 
against  private  enterprise  by  the  local  authorities 
between  1880  and  1900,  a  still  greater  injury  has 
been  done  by  the  opposition  of  municipalities  to 
the  Electric  Bulk  Supply  schemes.  As  the  result  of 
experience,  it  was  found  that,  by  the  construction  of 
huge  generating  stations,  electricity  could  be  supplied 
at  a  very  low  rate  to  consumers  over  a  large  area. 
Private  enterprise  thereupon  promoted  companies  to 
undertake  the  supply  of  electricity  in  bulk  mainly 
for  the  use  of  manufacturers,  and  also  for  lighting 
purposes.  Now,  owing  to  the  great  extent  of 
country  required  to  make  these  bulk  supply  schemes 
a  success,  local  authorities  were  debarred  from  em- 
barking upon  this  new  development.  Nevertheless, 
they  did  everything  possible  to  prevent  others  from 
securing  the  power  to  construct  such  works. 

The  first  company  which  undertook  to  supply  elec- 
tricity in  bulk  was  The  General  Power  Distribution 
Company,  formed  by  the  principal  manufacturers  in 
Chesterfield  and  district.  Their  plan  embraced  an 
area  of  210  square  miles,  and  they  sought  Par- 
liamentary  sanction    to    supply   consumers    therein. 

156 


National  Character  and  Proorress 

o 

Shortly,  the  position  was  that  in  this  manufacturing 
district,  with  a  population  of  over  one  milhon,  there 
were  some  1500  firms  or  private  individuals  using 
electricity.  Various  local  authorities  and  companies 
had  powers  of  supply  in  less  than  a  third  of  the  area, 
but  in  only  4^  square  miles  was  any  electricity  being 
supplied.  The  Bill  promoted  by  the  Company  was 
passed  by  the  House  of  Lords,  after  consideration 
by  a  Joint  Select  Committee,  with  the  amendment 
that  in  the  4^  square  miles  where  electrical  concerns 
already  existed,  the  Power  Company  should  only 
supply  customers  taking  current  in  bulk  for  power 
purposes,  and  not  less  a  quantity  than  10,000  units 
a  year.  Owing  to  the  lengthy  proceedings  in  Com- 
mittee, Parliament  had  adjourned  before  the  Bill 
reached  the  House  of  Commons.  In  the  next  Session 
(1889)  a  conference  of  the  Municipal  Corporations 
of  Lancashire  and  Cheshire  resolved  to  oppose  the 
Company's  Bill  when  it  again  came  before  Parlia- 
ment. The  grounds  for  so  doing  were  that  practi- 
cally the  monopoly  of  municipalities  owning  electric 
undertakings  would  be  affected  by  the  new  scheme. 
The  aid  of  the  Association  of  Municipal  Corporations 
was  invoked.  Even  the  Urban  District  Councils 
Association  was  invited  to  oppose  the  Bill,  though 
not  a  single  Urban  Council  was  affected  by  it.  The 
Bill  was  supported  by  all  the  Chambers  of  Commerce 
in  the  area  proposed  to  be  supplied.  It  was  a  fight 
between  the  municipal  monopolists  and  the  manu- 
facturers. The  former  prevailed,  and  the  Bill  was 
defeated  by  164  votes  to  132. 

The  Select  Joint  Committee  on  Municipal  Trading, 
1900,  was  informed  by  the  Secretary  of  the  Chesterfield 

157 


Socialism  in   Local  Government 

Chamber  of  Commerce  that  the  manufacturers  had 
to  contend  with  the  competition  of  German  and 
other  foreign  firms  who  had  the  advantage  of  rela- 
tively cheap  electrical  power.  The  Chesterfield  Cor- 
poration owned  a  gas  concern,  and  had  taken  out  an 
Electric  Light  Order  in  1894,  but  by  1898  had  not 
established  any  electricity  works.  "  It  has  been 
within  my  own  experience,"  said  the  witness,  "  that 
this  kind  of  opposition  to  private  enterprise  has 
driven  away  capitalists  who  have  preferred  to  go 
into  large  enterprises  of  a  similar  character  in 
foreign  countries.  They  fear  not  merely  the  ex- 
pense of  the  fight  in  Parliament,  and  the  risk  of  it, 
but  they  fear  also  the  hostile  attitude  of  the  local 
authorities  would  be  continued  if  they  (the  com- 
panies) should  get  charters  from  Parliament." 

In  1900,  another  company,  The  Lancashire  Elec- 
tric Power  Company,  sought  Parliamentary  sanction 
to  supply  an  area  of  a  thousand  square  miles  in 
Lancashire.  Again,  very  powerful  opposition  was 
offered  by  the  municipalities  to  the  passage  of  the 
Bill,  and  it  was  only  on  condition  that  the  great 
cities  in  the  scheme  should  be  prohibited  from  taking 
electricity  in  bulk  from  the  Company,  that  the  Bill 
was  allowed  to  pass.  Other  similar  companies  have 
been  opposed  and  conditions  laid  down  that  almost 
handicap  them  out  of  all  chance  of  establishing 
successful  concerns. 

Perhaps  the  most  notable  example  of  how  a 
municipality  can  hinder  the  advance  of  industry  is 
the  case  of  London.  The  Administrative  County 
of  London  Electric  Power  Bill,  1905,  in  spite  of 
opposition,  passed   all  its  stages,   except   the  formal 

158 


National  Character  and  Progress 

one  of  third  reading.  Time  did  not  permit  of  that 
final  step  before  the  end  of  the  Session.  When  the 
Company  re-introduced  its  Bill  in  the  next  Session 
(1906),  it  was  again  violently  opposed  by  the  London 
County  Council  and  other  local  authorities.  The 
London  County  Council,  in  fact,  promoted  a  Bill, 
though  its  proposals  were  crude  in  the  extreme. 
These  Bills,  with  others,  were  referred  to  a  Select 
Committee  of  the  House  of  Commons.  In  the  end, 
all  the  Bills  were  rejected,  though  the  Committee 
expressed  the  opinion  that  the  power  of  supply 
ought  to  be  vested  in  the  London  County  Council. 
"  Pending  the  introduction  of  a  satisfactory  Bill 
next  Session  by  the  London  County  Council — or 
in  default  of  the  London  County  Council,  then  by 
some  competent  body  of  promoters — it  is  not  advis- 
able that  any  further  progress  should  be  made  with 
such  Bills."  The  Committee  admitted  "that  the 
scheme  put  forward  by  the  Administrative  County 
Company  appeared  to  be  conceived  on  scientific 
lines,  and  calculated  to  afford  a  cheap  supply  of 
electrical  energy  at  private  risk."  They  also  empha- 
sised the  fact  "that  the  provision  of  cheap  electric 
power  for  London  is  so  important  and  pressing  that 
they  do  not  view  with  favour  the  possibility  of  the 
question  being  indefinitely  hung  up  :  they,  therefore, 
urge  that  the  Council  should  be  prepared  to  make 
a  decision  as  to  their  action  early  enough  to  allow 
other  Bills  to  be  presented  for  next  Session." 

In  1907  the  London  County  Council  introduced 
another  measure,  which  was  amended  to  allow  the 
Council  to  lease  its  powers  to  a  company  on  terms 
which  would  protect  the  consumer,  secure  a  share 

159 


Socialism  in  Local  Government 

of  profits  for  the  ratepayers,  provide  a  sliding  scale  of 
dividends  and  prices,  and  safeguard  the  community 
against  any  possible  abuse  of  power.  Parliament, 
however,  without  staling  any  reason,  rejected  the  Bill. 
In  1908  private  companies  again  promoted  three 
Bills,  and,  in  spite  of  the  strenuous  opposition  of 
Socialist-Progressive  members  of  Parliament,  the 
London  and  District  Electricity  Supply  Bill  passed 
the  second  reading.  Speaking  in  support  of  the 
Bill,  the  President  of  the  Board  of  Trade  said : 
"  The  new  plan  before  the  House  proposed  to  estab- 
lish a  great  outside  factory,  whereby  through  the 
agency  of  the  existing  distributing  centres  the  mains 
of  London  might  be  flushed  with  cheap  electricity. 
The  whole  idea  of  the  Company  was  that  economy 
would  result  from  production  in  bulk.  .  .  .  The 
Company  had  promised  to  supply  bulk  electricity 
at  half  the  price  which  ruled  in  London  at  the 
present  time,  and  all  the  harnessing  apparatus  for 
controlling  private  enterprise  according  to  modern 
ideas  was  in  full  operation  in  the  Bill."  Dealing 
with  the  opposition,  the  President  of  the  Board  of 
Trade  said :  "  There  was  the  opposition  of  those 
who,  on  perfectly  sincere  grounds,  were  opposed  to 
private  enterprise  of  any  kind,  and  there  was  also 
the  opposition  of  those  who  voiced  the  narrowest 
selfishness  of  minor  local  authorities.  ...  A  Borough 
Council  could  not  claim  immunity  from  all  competition 
which  modern  improvements  and  the  development 
of  events  had  created  " — a  statement  quite  contrary 
to  the  views  of  the  Association  of  Municipal  Cor- 
porations. "  He  submitted,  without  hesitation,  that 
to   all   the   millions    of  people   in   London,  rich  and 

160 


National  Character  and  Progress 

poor  alike,  whether  in  their  units  or  in  combination, 
cheap  electricity  was  scarcely  less  important  than 
cheap  and  abundant  food.  Any  one  who  stood 
between  London  and  an  absolutely  modernised  and 
unified  system  of  electrical  supply,  stood  between 
the  people  of  London  and  easements  of  the  con- 
ditions of  their  daily  labour  and  the  expansion 
of  prosperity  and  employment.  This  was  the  fifth 
consecutive  year  in  which  proposals  had  been  made 
to  furnish  London  with  a  bulk  supply,  and  mean- 
while municipal  enterprise  had  not  advanced  to  fill 
the  gap." 

As  a  result  of  the  long  delay  many  important 
industries  in  and  around  London  are  still  crippled 
through  inability  to  secure  a  supply  of  cheap  electric 
power.  Had  it  not  been  for  the  stupid  and  selfish 
action  of  local  authorities,  London  would  now  have 
been  supplied  with  electric  light  at  a  price  much 
lower  than  it  pays  at  the  present  time. 

The  private  Bills  have  been  supported  by  many 
of  the  leading  manufacturers  of  London,  by  the 
Great  Eastern  Railway  Company,  and  the  dock 
companies.  The  railway  companies,  in  fact,  declared 
that  the  passage  of  a  Bill  would  facilitate  the  electri- 
fication of  their  suburban  lines,  and  make  it  pos- 
sible to  give  a  cheaper,  quicker,  and  more  extensive 
suburban  service. 

What  has  been  the  cost  to  the  country  of  this 
prolonged  conflict  between  the  local  authorities  and 
private  enterprise  ?  It  is  impossible  to  form  any 
estimate,  but  judging  from  the  immense  strides 
which  other  countries  have  made  in  the  application 

i6l  L 


Socialism  in  Local  Government 

of  electricity  to  manufacturing,  the  price  we  have  to 
pay  is  a  loss  of  industrial  efficiency  which  we  may 
never  be  able  to  recover.  "The  social,  economic, 
and  industrial  loss  which  Great  Britain  has  suffered 
through  being  for  the  first  time  in  her  history 
behind  other  countries  in  adopting  a  new  invention 
of  first-class  importance  is  literally  incalculable."  ^ 

Beyond  the  loss  inflicted  upon  the  industrial 
community,  the  ordinary  consumer  has  also  suffered, 
and  the  labour  market  has  been  deprived  of  a  great 
customer. 

A  further  point,  not  to  be  lightly  ignored,  is 
the  almost  uncontrollable  power  wielded  by  vested 
municipal  interests.  The  vested  interest  of  a  private 
monopoly  is  difficult  to  overcome,  but  it  has  at  least 
a  formidable  opponent  in  the  local  and  central  govern- 
ment. On  the  other  hand,  there  is  no  organised  force 
capable  of  meeting  the  municipal  monopolists  on 
equal  terms  when  they  bar  the  road  to  improvement. 
It  is  certain  that  no  private  company  or  firm  could 
have  prevented  the  progress  of  a  rival  invention  so 
effectively  as  the  General  Post  Office,  for  instance, 
hindered  the  spread  of  the  use  of  the  telephone  and 
wireless  telegraphy  ;  no  syndicate  of  capitalists,  or 
alliance  of  traders,  could  have  held  the  House  of 
Commons  in  the  hollow  of  its  hand  as  the  Associa- 
tion of  Municipal  Corporations  has  done ;  and  no 
combination  of  public  service  companies  could  have 
so  long  continued  to  block  the  advance  of  electricity 
in  the  way  that  the  local  authorities  have  been  able 
to  do. 

The  moral  is  plain.      From  the  point  of  view  of 

^  Vesey  Knox,  Economic  Journal,  1901, 
162 


National  Character  and   Progress 

the  public  good,  it  is  necessary  to  curb  the  tyrannical 
conduct  of  municipal  and  State  monopolists.  This 
can  only  be  done  by  a  rigid  observance  of  the  sound 
rule  that  it  is  the  duty  of  Government  to  govern,  not 
to  trade. 


163 


XI 
THE  QUESTION  OF  MONOPOLY 

In  discussing  the  question  of  monopoly  in  relation 
to  municipal  trade,  it  is  necessary  to  remember  that 
there  are  two  forms  of  monopoly  to  be  considered — 

1 .  The  natural  monopoly-service  supplying  a  public 
necessity  ;  occupying  a  privileged  position  and  user 
of  public  land  ;  and  simple  in  its  method  of  opera- 
tion. The  general  nature  of  these  local  undertakings 
comprise  harbours,  docks,  ferries,  tramways,  gas, 
electricity,  and  water  works. 

2.  The  modern  monopoly  known  as  a  "  Trust," 
which  is  a  huge  combination  of  capital  invested  in 
manufacturing  industries  —  not  merely  local,  but 
national,  and  even  international,  in  operation. 

With  regard  to  the  first  class  of  monopoly,  it  is 
difficult  to  devise  a  definition  which  covers  every 
aspect  of  it.  In  most  cases,  the  undertakings  are 
natural  monopolies,  and  have  never  had,  nor  ever 
will  have,  competitors,  though  the  State  has  some- 
times sought  to  institute  competition.  An  example 
of  this  is  the  water  supply.  No  one  can  contemplate 
two  sets  of  pipes  being  laid  down  in  every  street  and 
possibly  into  every  house  of  a  town.  Therefore,  in 
granting  power  to  a  company  to  supply  water,  the  State 
gave  what  was  practically  a  monopoly.       Harbours 

164 


The  Question  of  Monopoly 

and  docks,  too,  are  not  matters  in  which  there  is 
severe  competition,  and  these  have  been  regarded  as 
monopolies.  There  are,  however,  indications  that 
the  rivah-y  of  large  seaport  towns  is  promoting  a  form 
of  competition  for  harbour  and  dock  accommodation 
which  may  become  serious.  A  wide  interpretation, 
therefore,  must  be  given  to  the  term  "  monopoly." 
It  may  denote  an  undertaking  of  a  fixed,  non-com- 
petitive nature,  or  of  a  semi-monopoly  character,  or 
where  rivalry  is  difficult. 

These  monopolies  are  to  some  extent  directly 
regulated  and  created  by  Government.  Parliament 
in  its  wisdom  has  thought  fit  to  impose  restrictions 
upon  private  enterprise  when  it  seeks  power  to  em- 
bark upon  these  natural  monopoly  undertakings. 
As  we  have  seen,  these  State  regulations  have  not 
been  altogether  practical,  and  because  of  the  lack  of 
knowledge  displayed  by  the  State  in  regard  to  elec- 
tricity, for  instance,  an  enormous  amount  of  harm  has 
been  done  to  the  public  welfare.  The  consequent 
discouragement  to  private  enterprise,  moreover,  fur- 
nished the  excuse  to  municipalities  to  indulge  in 
trading  themselves. 

The  second  kind  of  monopoly,  the  "Trust,"  is 
distinguished  from  the  ordinary  natural  monopoly 
because  it  is  not  necessarily  dependent  upon  occupa- 
tion of  public  land;  is  concerned  with  manufacturing; 
is  not  local  ;  and  is  not  the  result  of  a  right  granted 
by  Government,  It  is  a  monopoly  produced  by  the 
acts  of  individuals  alone.  Many  advocates  of  muni- 
cipal trading  repudiate  any  idea  that  municipal 
authorities  should  try  to  supersede  "  the  Trusts." 
Some  Socialists,  nevertheless,  use  the  bogey  of  "  the 

165 


Socialism  in  Local  Government 

Trust"  to  frighten  people  into  acceptance  of  un- 
limited municipal  enterprise. 

What  is  a  Trust  ?  It  is  a  combination  of  capitalists 
to  secure  control  of  a  trade  or  manufacture  with  the 
twofold  object  of  economy  in  production  and  larger 
profits.  As  a  general  rule,  to  attain  its  aim  it  has  to 
reduce  prices  to  the  consumer,  though  when  it  has 
secured  a  monopoly  it  often  tries  to  raise  charges. 
The  general  opinion  of  writers  upon  the  Trust  pro- 
blem is  that  "  the  Trusts  represent  a  distinct  economic 
gain  in  productive  power,"  but  that  their  establish- 
ment has  been  attended  by  many  abuses. 

It  is  asserted  that  the  Trust  could  never  have 
become  so  prominent  in  the  industrial  world  "  unless 
it  was  an  efficient  device  for  dealing  with  existing 
industrial  conditions."  And  it  may  be  added  that  the 
gross  abuses  of  power,  which  have  been  characteristic 
of  the  Trusts  in  the  United  States,  are  not  possible  in 
the  United  Kingdom. 

Even  Trusts  have  their  limitations.  Experience 
has  shown  that  to  "  corner  "  a  trade  requires  a  vast 
outlay  of  capital.  If  this  is  successfully  accomplished 
(and  often  it  fails),  then  it  is  invariably  attained  by 
reducing  prices  to  the  consumers.  So  far  as  this  is 
the  case,  we  may  agree  with  Mr,  G.  Bernard  Shaw 
that,  "  from  the  social  point  of  view,  the  Trust  is 
a  very  welcome  industrial  development."  Having 
established  a  monopoly,  the  Trust  then  seeks  to 
recoup  itself  by  raising  prices.  The  huge  initial 
expense  is  a  heavy  burden  on  the  shoulders  of  the 
combination.  With  the  rise  of  prices,  fresh  com- 
petitors, not  handicapped  by  enormous  capital  ex- 
penditure, come  into  the  field,  or  some  article  of  a 

i66 


The  Question  of  Monopoly 

similar  nature  is  offered  to  the  public.  The  Trust 
finds  that  high  prices  produce  competition,  and  the 
result  is  that  it  either  fails,  or  has  to  be  content  with 
normal  returns  on  the  goods  which  it  makes. 

The  contention  has  been  advanced  that  Trusts 
are  not  monopolies  in  the  proper  sense  of  the  term. 
They  are  not  in  so  strong  a  position  as  a  municipal 
monopoly.  The  fact  is,  that  whenever  these  "Trust" 
organisations  have  obtained  control  of  any  industry, 
it  has  been  the  result  of  their  ability  to  give  a 
cheaper  and  better  service.  There  is  always,  as  we 
have  seen,  a  potential  competition  at  hand  to  defeat 
any  attempt  to  extort  unjust  charges.  The  pre- 
dominant position  which  a  Trust  enjoys  thus  de- 
pends mainly  upon  its  ability  to  produce  and  sell 
at  a  low  price.  Now,  it  is  recognised  that  the 
possession  of  this  ability  is  only  temporary  and 
produced  by  competition.  The  striking  gains  "are 
merely  a  temporary  reward  for  the  development  of 
a  superior  form  of  business  organisation."  Leading 
American  business  men,  like  Mr.  Carnegie,  Mr.  Dill, 
and  Mr.  Wanamaker,  confess  that  "  every  attempt  to 
monopolise  the  manufacture  of  any  staple  article 
carries  within  its  own  bosom  the  seeds  of  failure," 
and  "  that  no  men,  or  body  of  men,  have  ever  been 
able,  or  will  be  able,  permanently  to  hold  control  of 
any  one  article  of  trade  and  commerce." 

The  question  whether  a  monopoly  of  a  Trust 
character  possesses  any  real  advantage  over  large 
concerns  competing  with  each  other  is  not  without 
its  interest  for  those  concerned  with  the  study  of 
Municipal  monopoly.  For  the  Trust  and  the  Muni- 
cipal monopoly  are  alike  in  some  prominent  respects. 

167 


Socialism  in   Local   Government 

We  will,  therefore,  glance  at  the  arguments  which 
have  been  used  in  this  controversy.  They  will 
help  us  to  understand  the  probable  effect  of  ex- 
tensive municipal  ownership  and  management  upon 
industrial  efficiency.  As  compared  with  large  in- 
dependent companies,  it  is  argued  that  an  established 
Trust,  with  no  competitors,  has  a  great  advantage 
in  producing  and  marketing  its  goods.  A  Trust, 
it  is  said,  can  run  its  plant  at  full  capacity  ;  whereas, 
under  competition,  many  establishments  can  be  kept 
in  operation  only  a  part  of  the  time.^  To  this 
contention  the  answer  is,  that  "  a  Trust  to  be  pre- 
pared for  supplying  the  market  promptly  in  times 
of  rapidly  increasing  demand  "  must  maintain  some 
surplus-producing  capacity  ;  and  that  demand  being 
always  variable,  sometimes  decreasing,  sometimes 
increasing,  the  reserve  capacity  in  competitive  firms 
is  both  unavoidable  and  even  necessary.  Where 
free  competition  exists,  the  ability  or  capacity  of 
supply  is  not  so  far  above  the  needs  of  the  market 
as  the  advocates  of  Trusts  would  have  us  believe. 
Another  argument  for  Trusts  is,  that  they  can  buy 
supplies  more  cheaply  than  large  independent  firms. 
But  investigation  has  shown  that  in  very  few  cases 
is  great  economy  in  purchasing  claimed  by  Trusts. 
Neither  is  there  that  great  saving  in  advertising  and 
in  travellers  which  is  often  thought  to  be  possible 
in  monopoly  concerns.  ''  To  whatever  extent  the 
Trust  organisers  have  counted  on  practically  can- 
celling expenditure  for  these  two  items,  on  the 
ground  that  buyers  will  be  obliged  to  come  to  the 
sole  manufacturers,  they  are  likely  to  be  surprised. 

1  Trusts,  fools,  and  Corporations,  Ripley,  p.  453. 
168 


The  Question  of  Monopoly 

Those  Trusts  that  have  tried  this  experiment  have 
discovered  that  the  demand  for  commodities  falls 
off  with  remarkable  rapidity  as  soon  as  effort  in 
pushing  sales  is  materially  reduced.  To  an  extent, 
which  few^  appreciate,  the  buying  public  has  become 
accustomed  to  being  reminded  of  its  needs  before 
making  purchases.  .  .  .  Except  in  staple  and  ab- 
solutely necessary  commodities,  demand  is  largely 
created  and  maintained  by  advertising  ...  or  through 
travelling  salesmen.  Hence  the  Trust  that  expects 
to  save  the  bulk  of  this  important  item  must  also 
expect  to  lose  through  diminished  sales  more  than 
the  economy  represents.  This  is  not  theory,  but 
the  testimony  of  leading  dealers  in  many  lines."  ^ 
Municipalities,  as  we  know,  even  now  have  to  adver- 
tise and  push  the  sale  of  gas  and  electricity,  though 
possessing  an  absolute  monopoly. 

Another  important  point  is  that  outside  natural 
monopolies,  which  are  often  the  subject  of  muni- 
cipalisation,  the  growth  of  commercial  activity  is 
curtailed  by  the  fact  that  firms  of  a  certain  size 
obtain  a  "  maximum  efficiency "  of  investment,  be- 
yond which  combination  brings  no  increased  pro- 
ductive ability.  Extension  beyond  those  limits 
involves  not  economy  but  waste  in  administration 
and  supervision. 

A  further  objection  to  Trusts,  and,  indeed,  to  State 
and  Municipal  monopolies  too,  is  that  established 
monopoly  is  certain  to  be  handicapped  by  "  listless 
and  unprogressive  management,"  arising  from  the 
absence  of  the  stimulus  of  competition.  In  the 
quest  for  monopoly.  Trusts  display  great  energy  and 

1  Neltleton  on  Trusts,  p.  64. 
169 


Socialism  in   Local  Government 

able  management,  but  having  secured  a  dominant 
position,  inertia  sets  in,  and  failure  follows.  As  an 
able  American  writer  states,  an  established  monopoly 
"  would  not  need  to  be  for  ever  pulling  out  its 
machines  and  putting  in  better,"  and  consequently 
in  rivalry  with  countries  where  the  competitive 
system  prevails,  such  a  Trust  would  lose  ground 
in  the  struggle  for  international  trade. 

This  tendency  to  apathy  in  monopoly  manage- 
ment raises  a  serious  question :  What  will  be  the 
general  effect  upon  the  industrial  leaders  ?  Given  a 
wide  extension  of  the  Trusts  or  Municipal  monopoly 
system,  it  is  certain  that  there  would  be  a  corre- 
sponding decay  in  those  high  qualities  which  mark 
our  captains  of  industry.  "  It  must  be  remembered 
that  the  able  leaders  now  at  the  head  of  the  successful 
Trusts  were  developed  out  of  a  field  which  aflforded 
the  widest  opportunity  for  creative  ability  and  inde- 
pendent initiative.  These  are  the  supreme  qualities 
requisite  for  industrial  leadership  ;  and  they  are  not 
likely  to  be  fostered  by  a  regime  which,  if  the  be- 
lievers in  monopoly  are  to  be  taken  at  their  word, 
closes  each  important  branch  of  manufactures  to 
new  enterprise,  and  renders  hopeless  all  competition 
with  a  single  consolidated  company.  Will  successive 
generations  of  bureau  chiefs  or  heads  of  depart- 
ments in  long-established  corporations  be  able  to 
continue  the  race  of  masterful  leaders  which  freedom 
in  originating  and  organising  independent  industries 
has  given  us  in  the  present  age  ?  "  ^  The  experience 
of  governmental  enterprise  with  its  bureaucratic 
methods  of  control  supplies  a  negative  answer  to  this 

1  Ripley,  p.  459. 
170 


The  Question  of  Monopoly 

question.  Both  in  the  monopoly  of  established 
Trusts  and  in  the  monopoly  of  municipalities  there 
does  set  in  that  decay  of  managing  ability,  and  the 
appearance  of  elaborate  and  costly  administration 
which,  in  the  end,  spells  failure. 

Therefore,  neither  in  Trusts  nor  in  Municipal 
monopoly  does  public  salvation  lie.  As  we  have  seen, 
Trusts,  unless  well  conducted  in  the  public  interest, 
have  no  high  hope  of  success.  If  established  they 
incline  to  inefficiency,  and  sooner  or  later  are  passed 
in  the  industrial  race  by  the  potential  competitors 
who  are  ready  to  enter  into  rivalry  whenever  the 
chance  occurs.  In  so  far  as  the  Trust  in  its  early 
stage  reduces  the  cost  of  production  and  lowers  prices, 
it  confers  a  benefit  upon  the  consumer.  But  that  is 
its  only  recommendation.  In  its  later  phases  it 
struggles  to  maintain  abnormal  prices  against  com- 
petitors who  soon  oust  it  from  its  predominant 
position.  In  the  same  way  a  monopoly  service 
carried  on  by  a  municipality  may,  at  the  start,  offer 
a  somewhat  lower  price  than  the  superseded  com- 
pany, but  ultimately  in  the  ebb  and  flow  of  industrial 
progress  the  municipality  finds  itself  outstripped  by 
private  enterprise  which  offers  a  better  and  cheaper 
service.  This,  as  will  be  seen  later,  is  the  case  with 
regard  to  electricity  and  gas  supply.  The  great 
provincial  cities  have  forced  Parliament  to  protect 
their  municipal  electricity  plants  against  the  com- 
petition of  bulk  supply  companies  which,  with  the 
latest  machinery,  can  supply  urban  areas  at  prices 
much  less  than  those  charged  by  municipalities. 

This  opens  up  another  important  phase  of  the 
monopoly  power  of  local  authorities,  viz.   the  action 

171 


Socialism  in  Local  Government 

of  the  Association  of  Municipal  Corporations,  whose 
chief  object  is  "  By  complete  organisation  more 
effectually  to  watch  over  and  protect  the  interests, 
rights,  and  privileges  of  municipal  corporations  as 
they  may  be  affected  by  Public  Bill  legislation,  or 
by  Private  Bill  legislation  of  general  application 
to  Boroughs."  In  nearly  every  instance,  the  whole 
force  of  the  municipal  authorities  is  thus  utilised  to 
defeat  Bills  promoted  by  private  companies,  not  only 
in  regard  to  trades  carried  on  by  municipalities,  but 
also  in  other  matters.  The  interest  of  the  consumer, 
the  trader,  and  the  manufacturer,  who  after  all  are 
the  persons  chiefly  concerned,  is  spurned  by  the 
Municipal  monopolists. 

To  take  one  case.  When  the  General  Power  Dis- 
tribution Bill  was  before  the  House  of  Commons, 
Mr.  Bromley  Davenport,  M.P.,  said  :  "  We  are  asked 
to  do  this  (to  reject  the  Bill)  at  the  bidding  and  at 
the  instigation  of  an  Association  of  Municipal  Cor- 
porations scattered  all  over  the  country,  some  of 
whom  are  interested  in  gas  undertakings,  .  .  .  some 
of  whom  have  electric  supplies  of  their  own  at  a 
cost  to  the  consumer  in  every  case  higher  than  the 
maximum  which  is  permitted  under  this  Bill,  and 
others  of  whom  neither  have,  nor  propose  to  have, 
any  electric  supply,  but  who  combine  with  other 
corporations  in  a  spirit  of  friendship  and  sympathy 
and  brotherly  affection  when  the  sacred  rights  of 
Municipal  monopoly  are  threatened  with  the  possi- 
bility of  competition  by  private  enterprise."  He 
went  on  to  say  that  *' the  influence  of  the  Corpora- 
tions has  been  very  strong  in  this  House,  but  I  cannot 
refrain  from  saying  that  I  think  it  will  be  well  if  they 

172 


The  Question  of  Monopoly 

are  careful  that  that  influence  is  not  exercised  unduly 
and  excessively,  as  I  think  it  has  been  in  connection 
with  this  Bill."  It  was  not  the  influence  of  a  single 
municipality  interested  directly  in  a  local  measure  to 
which  he  objected.  "  I  refer  to  the  combined  and 
concerted  influence  of  the  Association  of  Municipal 
Corporations  which  is  brought  to  bear  on  an  indivi- 
dual member  of  this  House,  for  the  purpose  almost 
of  compelling  him  to  vote  for  or  against  a  Bill  which, 
as  a  matter  of  fact,  possibly  may  not  concern,  even 
in  the  remotest  degree,  the  constituency  which  he 
represents." 

On  another  occasion,  in  1900,  when  the  House  of 
Commons  was  discussing  the  Lancashire  Power  Com- 
pany's Bill,  Mr.  J.  C.  Macdona,  M.P.,  said:  "There 
is  a  feeling  in  the  country  that  the  municipalities  are 
organising  themselves  into  a  gigantic  monopoly  with 
a  view  to  strangling  private  enterprise  in  regard  to 
the  supply  of  electricity  at  the  moment  of  its  birth." 

The  action  of  the  Association  of  Municipal  Cor- 
porations has  been  principally  dictated  by  the  fear 
that  the  gas  -  owning  municipalities  would  find  a 
formidable  competitor  in — 

1.  The  Electric  Light  Companies,  under  the  Acts 
of  1882  and  1886,  and 

2.  In  the  Power  Supply  Companies,  which  can 
supply  electricity  at  a  lower  price  than  that  charged 
by  any  municipality. 

Indeed,  the  situation  is  well  described  by  Mr.  G. 
Bernard  Shaw  when  he  says :  "  A  moment's  con- 
sideration will  show  that  the  successes  of  municipal 
electricity  belong  to  the  early  stages  of  the  industry  " 
— though  that  success  is  not  an  historical  fact — "  and 

173 


Socialism  in  Local  Government 

can  only  be  maintained  if  the  municipalities  de- 
liberately check  its  inevitable  development  by  sup- 
pressing private  competitors."  ^  This  opposition 
to  improvement,  and  the  desire  for  monopoly,  is 
clearly  shown  by  a  resolution  passed  by  the  Municipal 
Corporations  Association :  '*  That  this  Association 
affirms  the  principle  that  where  local  authorities 
have,  with  the  sanction  of  Parliament,  established, 
or  are  in  course  of  establishing,  undertakings  for 
pubhc  benefit,  and  have  not  failed  in  their  duties, 
it  is  not  right  or  expedient  that  powers  should  be 
granted  to  companies  to  compete  with  them." 

In  arousing  opposition  to  the  Electricity  Supply 
Bill  of  1904,  the  leading  municipal  trading  paper. 
The  Municipal  Journal,  protested  against  the  inaction 
of  municipalities,  and  incidentally  admitted  the  jus- 
tice of  the  charge  that  municipalities  resist  progress. 
''  Corporations,"  it  said,  "  already  possessing  their 
electricity  supplies  are  entirely  wrong  in  assuming 
that  the  measure  does  not  affect  them.  It  will  affect 
them  very  materially.  When  in  the  course  of  time 
urban  districts  are  able  to  obtain  their  current  at 
about  half  the  price  at  which  municipal  corporations 
can  manufacture  it,  the  consumers  in  the  large  cities 
and  towns  will  no  longer  be  content  to  pay  the 
larger  figure.  They  will  want  to  be  placed  on 
equal  terms  with  the  outside  districts,  and  they  will 
have  justice  at  their  backs.  What  then  will  become 
of  our  city  and  towns  electricity  supply  system  ?  "  ^ 

From  first  to  last,  the  opposition  offered  on  behalf 
of  the  municipalities  to  private  enterprise  has  been 

^  The  Common  Sense  of  Municipal  Trading,  p.  58. 

"^  June  17,  1904. 

174 


The  Question  of  Monopoly 

that  of  a  "vested  interest"  of  the  worst  type.  It 
has  been  actuated  solely  by  a  desire  to  prevent  im- 
provement and  any  lowering  of  prices.  Moreover, 
the  vested  interest  of  a  company  can  be  controlled 
both  by  the  local  authority  and  Parliament,  but 
the  influence  of  the  municipalities  seems  to  be  so 
powerful  that  even  Parliamentary  members  must 
obey  their  orders,  for  our  great  provincial  cities  keep 
a  tight  hand  on  their  borough  members.  The  very 
bodies  which  are  supposed  to  stand  for  freedom  of 
trade  and  the  supply  of  commodities  to  the  con- 
sumers at  the  lowest  market  prices  are  now  become 
the  most  cruel  of  monopolists,  and  have  established 
against  the  people  the  same  injustice  which  they 
charged  against  private  monopoly,  and  which  they 
professed  to  remedy  when  they  undertook  municipal 
trading.  Further,  they  have  what  no  company  (save 
gas  concerns)  possesses,  a  perpetual  monopoly. 

To  the  contention  that  their  customers  are  the 
electors,  it  is  sufficient  to  say  that  such  is  not  the 
case.  Many  large  limited  liability  companies,  who 
are  usually  the  greatest  consumers  of  electricity 
and  gas,  have  no  voting  power  in  respect  of  their 
business,  and  important  manufacturing  interests  are 
made  the  prey  of  a  monopoly  service  conducted 
by  a  municipality  which,  to  meet  its  financial 
liability,  must  keep  up  prices.  The  benefit  of  the 
community  has  ceased  to  be  even  the  professed 
object  of  municipal  trade  under  such  circumstances. 
Is  there  no  need  to  fear  the  Municipal  Trust  ? 

The  fact  that  what  was  deemed  a  municipal 
monopoly  thirty  years  ago  now  finds  itself  in  severe 
competition    with  a   new   invention,  leads  to  a  new 

175 


Socialism  in  Local  Government 

consideration.  When  the  recent  enormous  advances 
in  science  and  discovery  are  considered,  it  becomes 
a  serious  question  whether  any  so-called  monopoly 
has  a  very  long  life  in  front  of  it.  Municipal  trade 
in  any  monopoly  will  probably  prove  to  be  only  a 
temporary  success,  if  at  all.  In  these  circumstances 
it  is  important  to  attach  more  weight  than  has 
hitherto  been  done  to  this  risk  of  supersession.  It 
certainly  indicates  that  the  wisest  course  for  a  town 
to  adopt  when  faced  with  what  seems  to  be  a 
monopoly  business  in  private  hands,  is  to  see  that 
it  is  subjected  to  a  sane  system  of  State  regulation 
and  control. 

We  may  conclude,  therefore,  as  the  result  of  our 
general  survey  of  monopolies,  that  there  is  likely  to 
be  less  injury  to  the  public  from  the  Trust  than 
from  the  Municipal  monopoly.  Both  contain  bad 
features.  In  the  case  of  the  former,  these  may  be 
remedied  by  competition  and  State  control.  As 
regards  the  latter,  it  uses  its  enormous  power  and 
influence  in  the  legislature  to  protect  its  vested 
interests,  and  to  enable  it  to  pursue  its  anti-social 
work  of  keeping  up  prices  in  its  municipal  area, 
while  private  enterprise  is  reducing  them  just  over 
the  boundary  of  the  city.  It  is  too  sacrosanct  to 
be  touched  at  present,  but  ultimately  the  common- 
sense  of  the  people  will  demand  its  abolition. 

The  Municipal  Reform  Act  of  1835,  which  purged 
the  Municipal  Corporations  of  their  monopolistic 
character,  is  a  standing  witness  to  the  evil  wrought 
by  unrestrained  municipal  interference  with  trade. 
Less   than    a    hundred    years   have    lapsed    and   we 

176 


The  Question  of  Monopoly 

have  again  fallen  a  prey  to  the  old  abuse,  though 
Section  247  of  the  Municipal  Corporations  Act, 
1882,  repeats  the  wise  provision  of  the  1835  Act, 
which  is  headed — 


'*  Freedom  of  Tt-oding." 

"  Notwithstanding  any  custom  or  bye-law,  every 
person  in  any  borough  may  keep  any  shop  for  the 
sale  of  all  lawful  wares  and  merchandise  by  whole- 
sale or  retail,  and  use  every  lawful  trade,  occupation, 
mystery,  and  handicraft  for  hire,  gain,  sale,  or  other- 
wise within  any  borough." 


177  M 


XII 

LABOUR   AND    POLITICS 

The  Administrative  Socialist  in  seeking  to  catch  the 
votes  of  the  electorate  covers  his  hook  with  flies  of 
varied  hue.  To  the  citizen  consumer  the  bait  is  held 
out  that  municipal  ownership  and  management  mean 
a  better  service  and  low  prices.  To  the  labourer 
the  suggestive  temptation  is  that  municipal  trading 
gives  higher  wages  and  superior  labour  conditions. 
It  will  be  noticed  that  these  propositions  are  mutu- 
ally destructive  of  one  another.  The  first  involves 
cheaper  production  than  is  obtained  in  private  trade; 
the  second  negatives  it,  because  higher  wages  and 
other  concessions  to  labour  must  increase  the  cost 
of  production.  If  labour  benefits,  the  consumer 
suffers,  and  vice  versa;  unless  the  loss  produced  by 
concessions  to  both  involves  an  increase  of  rates, 
when  the  labourer  and  the  consumer  may  gain  a 
slight  advantage  at  the  expense  of  the  ratepayers, 
who  are  largely  neither  one  nor  the  other. 

It  is,  however,  contended  that  the  advantages  can 
be  provided  out  of  the  saving  of  the  contractors' 
profit,  which  is  alleged  to  follow  from  municipal 
management.  No  proof  has  yet  been  adduced  that 
consumers  receive  from  the  municipality  a  better 
quality  at  lower  rates  than  is  given  by  companies. 

178 


Labour  and   Politics 

Nor  can  it  be  proved  that  the  municipahty  makes 
the  profit  which  is  made  under  private  management. 
The  truth  is  that  municipal  work  is  always  more 
costly  than  private  work.  There  is  less  interest  by 
the  town  employes  in  the  execution  of  their  tasks. 
The  incentive  of  personal  profit  is  not  present  to  so 
large  an  extent  as  is  the  case  where  a  contractor 
oversees  the  job.  The  municipal  foreman  is  just 
a  little  slacker  in  his  supervision,  and  the  workmen 
show  a  smaller  output.  There  is  also  a  waste  of 
material  and  time,  and,  in  these  circumstances,  "  the 
contractors'  margin  of  profit,"  which  the  municipality 
hopes  to  save,  shrinks  into  nothingness.  The  only 
advantage  which  the  labourer  can  seriously  claim 
that  he  derives  from  municipal  employment  is  that 
he  can  work  slower  than  he  would  for  a  private 
employer.  But  is  that  beneficial  either  to  the  com- 
munity or  to  the  workman  himself  ?  If  he  takes  an 
hour  to  well  and  truly  lay  one  hundred  bricks  for  a 
private  builder,  and  half  as  long  again  for  the  town, 
he  is  so  much  the  less  efHcient  under  municipal 
management.  If,  in  addition,  he  handles  his  material 
on  the  municipal  job  less  carefully  than  on  a  con- 
tractor's works,  the  consequent  waste  adds  to  the 
cost  of  the  work. 

From  the  point  of  view  of  wages,  however,  there 
is  certain  ground  for  the  assertion  that  some  classes 
of  workmen  receive  higher  wages  than  are  paid  by 
private  enterprise.  We  may  observe,  at  the  outset, 
that  this  cannot  apply  to  those  trades  where  trades 
unions  exist.  It  is  the  general  rule  of  munici- 
palities to  insert  a  fair-wages  clause  in  contracts,  by 
which  the  trade  union  rate  of  wages  and  conditions 

179 


Socialism  in  Local   Government 

of  labour  are  secured  for  the  employes.  Therefore, 
wherever  there  is  a  trades  union,  in  that  class  of 
labour  there  can  be  no  real  or  just  preference  be- 
tween municipal  and  private  employment.  It  may 
be  urged  that  some  towns  pay  more  than  trades 
union  rates  of  wages  ;  so  do  some  private  firms. 

As  bearing  upon  the  point  at  issue,  it  is  useful  to 
record  the  attitude  of  the  general  body  of  trade 
unions  towards  Municipal  Employes  Associations. 
In  1894  there  was  founded  a  new  form  of  trade 
union,  known  as  the  Municipal  Employes  Associa- 
tion. Ten  years  later  its  membership  began  to  grow 
rapidly,  and  it  now  claims  to  comprise  some  20,000 
members.  It  seeks  to  gain  its  objects  through  edu- 
cation of  public  opinion  ;  by  the  election  of  its  own 
representatives  upon  municipal  bodies ;  and  by  op- 
position to  candidates  opposed  to  their  aims.  The 
complaint  of  municipal  workers  was  that  trade 
unions  of  particular  trades  did  not  possess  so  much 
power  as  a  union  of  municipal  workers,  who  could 
appeal  to  voters  and  bring  pressure  to  bear  on  their 
employers  at  election  times. 

The  methods  of  the  Municipal  Employes  Associa- 
tion can  best  be  gauged  by  the  following  circular 
issued  by  it.  It  is  headed,  "Why  we  want  a  Society, 
and  why  every  Municipal  Employe  should  be  a 
member  of  the  Municipal  Employes  Association." 

"(i)  Because  unity  is  strength. 

(2)  Because  we  can  get  all  information  as  to  the 
wages,  hours  of  labour,  emoluments,  &c., 
from  every  town  for  each  class  of  work. 

(3)  Because  we  could  use  our  collective  influence 
to  get  equal  wages  and  hours,  emoluments, 

180 


Labour  and  Politics 

&c.,  for    the    same    kind    of    work  in  every 
town. 

(4)  Because  we  could  use  more  influence  if 
all  together,  and  acting  together  through  one 
channel — i.e.  10,000  men  in  one  Associa- 
tion is  stronger  than  1000  in  ten  different 
Associations. 

(5)  Because  you  require  a  man  to  represent  you 
who  has  had  experience  in  the  service  of  a 
municipal  body. 

(6)  Because  the  officers  of  this  Association  have 
worked  for  years  for  a  municipal  body,  and 
therefore  know  the  way  to  approach  and 
deal  with  local  authorities  for  you  better 
than  others  who  have  never  worked  for  a 
public  body. 

(7)  Because  you  get  more  benefits  in  the  Associa- 
tion than  any  other  for  2|d.  per  week. 

(8)  Because  it  is  estimated  there  are  nearly 
2,000,000  municipal  employes  in  the  United 
Kingdom.  What  could  they  not  do  for 
themselves  if  all  together  ? 

(9)  Because  we  are  promoting  a  Superannuation 
Bill  for  all  municipal  employes  not  at  pre- 
sent entitled  to  a  pension. 

(10)  Because  each  branch  holds  its  own  funds. 

(11)  Because,  no  matter  what  class  of  work 
we  do,  we  have  the  same  aldermen  and 
councillors  to  work  under  in  each  town. 

(12)  Because  nearly  every  grade  of  municipal 
employment  is  represented  already  in  the 
Association  —  i.e.  tramway  employes  (all 
grades),      asylum      employes      (all     grades), 

181 


Socialism  in  Local  Government 

electricity  works  (all  grades),  telephone  em- 
ployes (all  grades),  gas  workers  (all  grades), 
park  employes  (all  grades),  weights  and  mea- 
sures testers  and  inspectors,  engine  drivers 
(all  kinds  of  engines),  boiler  stokers,  sewer 
men,  fire  brigade  men,  carmen,  pickers,  gene- 
ral labourers,  masons'  labourers,  sweepers, 
and  in  fact  all  grades. 

(13)  Because  you  should  support  an  Association 
founded  by  municipal  employes  in  prefer- 
ence to  other  societies  established  by  others. 

(14)  Because  concessions,  estimated  to  cost  the 
municipal  authorities  upwards  of  ^^2, 000,000 
per  annum,  have  been  obtained  by  us. 

(15)  Because  we  have  never  been  defeated  by  a 
municipal  body  yet ;  if  they  decline  a  request 
to-day,  we  are  up  and  at  them  again  to- 
morrow. 

(16)  Because  there  is  no  need  for  strikes  with  us. 
We  can  get  what  we  want  without  them,  if 
we  are  united,  by  returning  to  the  Council 
men  who  are  in  favour  of  fair  conditions  of 
employment. 

(17)  Because  we  are  financially  sound,  and  our 
accounts  have  been  examined  by  chartered 
accountants,  and  we  give  each  member  a 
balance-sheet  quarterly,  free. 

(18)  Because  we  have  no  age  limits  or  medical 
examinations.  We  say  the  strong  helps  the 
weak,  and  the  young  the  old,  because  we  are 
all  engaged  in  municipal  employment. 

(19)  Because  we  get  concessions  ;  not  shout  and 
rave  about  them. 

182 


Labour  and  Politics 

(20)  Because  we  at  present  represent  the  employes 
under  ninety-five  municipal  authorities." 


HOW    WE    DO    IT. 

"(i)  By  questions  to  candidates  at  Municipal 
Elections.  Those  who  will  not  pledge  them- 
selves definitely  to  the  above,  we  do  not 
vote  for. 

(2)  By  application  through  the  Society,bypetitions 
from  the  employes,  &c. 

(3)  We  do  not  advocate  strikes  or  lock-outs,  but 
give  our  members  the  money  back  which 
could  be  used  in  this  way  in  death  benefits."  ^ 

This  attempt  to  combine  municipal  workers,  and 
to  exclude  men  of  the  same  trades  in  private 
employment,  rests  upon  the  selfish  belief  that 
municipal  councils  are  capable  of  less  resistance 
than  private  employers  to  demands  for  higher 
wages  and  better  labour  conditions.  Their  pro- 
gramme includes  a  minimum  wage  of  30s.  in  and 
around  London,  and  28s.  in  the  principal  provincial 
towns  ;  a  48  hours  week  ;  a  fortnight's  holiday  every 
year,  with  pay  ;  a  pension  on  superannuation  ;  half 
wages  when  sick  and  full  wages  when  incapacitated 
through  accident.  These  conditions  are  far  higher 
than  those  which  a  similar  class  of  men  obtain  in 
private  and  municipal  occupation.  The  wages  of 
general  labourers  in  the  employ  of  towns  vary  from 
17s.  6d.  a  week  in  Bury  St.  Edmunds  to  30s. 
in  Battersea,  where  Socialism  rules  the  Council  ; 
refuse  collectors  and  drivers  earn  from  iSs.  a  week 

1  National  Civic  Federation  Report,  part  ii.  vol.  ii.  p.  37. 

^83 


Socialism  in  Local  Government 

in  Colchester  to  30s.  again  in  Battersea.  Hours 
of  labour  are  from  59i^  to  48  hours  per  week,  a 
fair  average  for  general  labour  being  53  or  54 
hours  per  week. 

The  consequence  of  success  by  the  Municipal 
Employes  Association  in  securing  the  adoption 
of  their  programme  by  local  bodies  would  be  that 
a  specially  favoured  class  of  workmen  would  be 
created  at  the  expense  of  the  ratepayers  ;  and  that 
either  one  of  two  things,  or  perhaps  both,  would 
happen — the  labourer  in  private  employment  would 
agitate  for  like  conditions,  or  support  a  general 
extension  of  municipal  trade. 

Naturally,  this  new  experiment  in  trade  unionism 
provoked  the  opposition  of  the  existing  unions.  As 
we  have  seen,  it  has  been  the  general  policy  of 
local  bodies  to  embody  in  their  Standing  Orders 
or  Minutes  resolutions  to  the  effect  that  wages  and 
other  labour  conditions  shall  be  those  recognised 
and  practised  by  private  employers  and  trade  unions 
in  the  town  or  district.  Where  there  is  no  trade 
union  (and,  so  far  as  unskilled  labour  is  concerned, 
this  is  often  the  case),  then  a  minimum  wage  and 
maximum  hours  of  labour  based  on  those  fol- 
lowed by  the  best  private  employers  is  adopted 
by  municipalities. 

The  object  of  the  trade  unions  is  to  secure  equal 
conditions  in  both  private  and  municipal  occupation. 
It  is  a  settled  policy  of  trade  union  councillors,  as 
distinguished  from  Socialist  councillors,  to  refuse 
to  take  up  the  grievances  of  any  municipal  work- 
men unless  they  belong  to  the  union  for  their 
particular    trade,    and    even    then     they     refuse    to 

184 


Labour  and  Politics 

advocate  on  their  behalf  any  conditions  superior 
to  those  which  the  workman  enjoys  under  the  more 
favourable  class  of  private  employers.-^ 

The  recent  attempts  by  the  Municipal  Employes 
Association  to  seduce  workers  from  their  allegiance 
to  the  ordinary  trade  union,  and  their  efforts  to 
draw  a  distinction  between  the  same  classes  of 
workers,  led  to  a  direct  attack  upon  the  Association 
by  the  Tramway  and  Vehicle  Workers,  the  Coach- 
makers,  the  National  Amalgamated  Union  of  Labour, 
and  the  Gas  Workers  and  General  Labourers.  At 
the  Thirty-ninth  Annual  Trade  Union  Congress  held 
in  Liverpool  in  September,  1906,  the  following 
resolution  was  carried  by  1,196,000  votes  against 
42,000  votes  : — 

"  Resolved,    that    any   method    of  organising 

which     seeks     to     divide     workmen     employed 

by     public    authorities    from    their    fellows    in 

the     same     occupations    employed    by    private 

firms    is    detrimental    to    the    best    interests    of 

trade    unionism,    and    that    the    Parliamentary 

Committee  use  its  best  endeavours  to  prevent 

the  spread  of  such  methods  of  organisation." 

As  a  result,  the  Municipal  Employes  Association 

and    similar    unions     of    Government    workers    are 

excluded   from    the    support   of    trade    unions,    and 

their  principles  are  repudiated. 

We  shall,  at  a  later  stage  of  this  discussion,  return 
to  this  question  of  Municipal  Trade  Unions  ;  for 
the  moment  we  only  relate  this  incident  as  sup- 
porting the  contention  that,  on  the  whole,  the 
worker   receives   equal   treatment    at    the    hands    of 

^  Municipal  and  Private  Operation  of  Public  Utilities,  part  ii.  vol.  ii. 

185 


Socialism  in  Local  Government 

both  private  and  municipal  employers  ;  because 
that  is  the  object  which  trade  unions  have  in 
view. 

When,  however,  we  come  to  consider  unskilled 
labour,  which,  as  a  rule,  is  not  organised,  it  is 
strange  to  find  that  Municipal  Councils  do  fre- 
quently pay  higher  wages  than  private  firms.  A 
closer  investigation,  however,  reveals  the  reason. 
Unskilled  labour  in  private  firms  consists  largely 
of  men  too  old  for  efficiency.  Often,  in  private 
employment,  old  men  are  kept  on  the  staff  at  odd 
jobs.  In  municipal  employment  this  is  now  seldom 
the  case.  Of  late  years  it  has  become  more  and 
more  the  tendency  to  exclude  elderly  men  from 
municipal  work,  and  to  pay  a  comparatively  high 
rate  of  wages  in  order  to  secure  the  most  capable 
men  in  the  unskilled  labour  market.  Therefore, 
there  is  not  in  reality  the  distinction  as  to  wages 
between  private  and  municipal  enterprise  which 
appears  at  first  sight.  "  The  lowest  rates  paid 
by  private  employers  with  which  comparison  should 
be  made  are  those  paid  to  older  or  less  able-bodied 
men.  These  are  paid  according  to  a  more  or 
less  close  observation  of  the  amount  of  work  they 
can  do,  or  the  less  exacting  position  they  occupy, 
compared  with  the  able-bodied  and  most  efficient 
labourers.  If  the  calculation  is  close  enough,  the 
actual  labour  cost  of  the  work  done  is  not  greater 
for  the  able-bodied  and  not  less  for  the  unable. 
The  municipal  minimum,  however,  placed  as  it 
is  at  or  above  the  standard  for  the  able-bodied, 
is  uneconomical  if  paid  to  the  less  able.  Con- 
sequently,  one    effect  has  been    that  the   new  men 

i86 


Labour  and  Politics 

taken  on  by  the  municipal  departments  do  not 
include  that  class.  This  is  particularly  noticeable 
in  positions  where  the  work  is  easy  or  disagree- 
able, such  as  those  of  lamplighters,  watchmen,  and 
scavengers.  These  positions  were  formerly  filled 
at  rates  as  low  as  14s.  by  old  men,  or  incompetent 
or  almost  unemployable  men,  but  they  are  now 
filled,  so  far  as  new  appointments  are  concerned, 
by  able-bodied  men.  Similar  changes,  though  not 
so  extreme,  are  found  among  yard  labourers,  car 
cleansers,  motormen,  conductors,  and  all  classes 
of  labour,  which  formerly  were  hired  at  market 
rates,  but  now  are  hired  at  minimum  rates.  The 
men  now  employed  could  not  have  been  secured 
at  the  former  low  wages.  For  them  the  corpora- 
tion minimum  has  not  meant  as  great  an  increase 
in  wages  as  the  increase  on  the  books  would 
indicate,  because  they  could  command  similar 
wages  in  private  employment.  In  general,  the 
minimum  is  not  as  much  an  increase  of  wages 
as  it  is  a  change  of  personnel.  A  different  and 
superior  class  of  men  is  employed."  ^  It  may  be 
added  that  the  old  men  formerly  employed  by 
municipalities  are,  under  the  new  system,  thrown 
upon  the  poor  rates. 

It  is  further  necessary  to  consider  the  attitude  of 
Labour  towards  municipal  trading,  not  merely  from 
the  wages  point  of  view,  but  from  the  political  stand- 
point. It  is  here  that  the  gravest  danger  to  local 
government   lies — the   peril   of   corruption.     As   we 

'  Municipal  and  Private  Operation  of  Public  Utilities,  part  ii.  vol.  ii. 
p.  66. 

187 


Socialism  in  Local  Government 

have  observed,  the  corrupt  influence  of  the  Municipal 
Employes  Association  is  unconcealed.  It  openly 
seeks  to  secure  control  of  local  administration  in 
order  to  obtain  ''spoils"  for  municipal  employes. 
The  reason  of  its  quarrel  with  the  other  trade 
unions  was  its  attempt  to  secure  for  a  portion  of 
the  workers  what,  in  the  opinion  of  Labour,  ought 
to  be  the  privilege  of  all. 

Mr.  Keir  Hardie,  M.P.,  the  leader  of  the  Labour 
Party,  at  the  Annual  Conference  of  the  Municipal 
Employes  on  May  27,  1905  (according  to  Lloyd's 
Newspaper  of  May  28,  1905),  said: — 

"  As  a  Socialist  he  was  naturally  strongly  in 
favour  of  organisation  among  municipal  em- 
ployes, and  was  pleased  to  see  the  marvellous 
progress  this  Association  had  made.  In  going 
through  some  Parliamentary  papers  the  other 
day  he  came  across  one  which  fairly  astounded 
him,  for  from  it  he  learned  that  in  this 
country  there  were  over  2,000,000  municipal 
employes.  As  the  total  of  wage  -  earners 
numbered  14,000,000,  this  was  very  interest- 
ing. He  had  also  found  that  in  1903,  when 
there  was  a  reduction  in  wages  all  round,  the 
wages  of  municipal  employes  had  alone  in- 
creased— he  might  say,  had  doubled." 

At  a  meeting  of  the  local  branch  of  the  Municipal 
Employes  Association,  held  at  East  Ham  on  Sep- 
tember 20,  1905,  Mr.  P.  J,  Tevenan,  the  organiser, 
said  :  "  As  Municipal  Employes  their  numbers  were 
going  up  to  a  matter  of  one  mihion.  Municipalisa- 
tion  he  held  was  a  means  to  an  end  ;  the  end  was  to 

188 


Labour  and  Politics 

establish  a  principle   of   nationalisation    in   the   near 
future  of  the  industries  of  the  country."  ^ 

At  the  Trades  Union  Congress,  1905,  the  following 
resolutions  were  adopted  without  debate : — 

"  Municipal  Trading. — That  we  call  upon  the  Par- 
liamentary Committee  to  bring  all  possible  pressure 
to  bear  upon  the  members  of  Parliament  and  other 
public  representatives,  so  that  public  bodies  may  be 
empowered  to  enter  into,  and  carry  on,  any  work  or 
business  on  behalf  of  the  people,  so  as  to  steady  the 
volume  of  trade  and  provide  work  at  fair  rates  for 
those  who  would  otherwise  be  idle." 

^'Municipal  Banking.  —  That,  in  order  to  provide 
larger  means  of  carrying  out  social  reforms,  public 
administrative  bodies  be  empowered  to  issue  their 
own  credit  notes,  thereby  avoiding  the  heavy  interest 
charged  for  the  use  of  borrowed  money,  and  the 
Congress  hereby  instructs  its  Parliamentary  Com- 
mittee to  draft  a  Bill  embodying  this  principle,  and 
to  use  all  possible  means  to  get  the  same  passed  into 
law." 

"  Hours  of  Labour. — That,  in  view  of  the  present 
rapidity  of  production  and  the  continuous  intro- 
duction of  labour-saving  machinery,  and  the  con- 
sequent displacement  of  manual  labour  in  many 
industries,  this  Congress  declares  in  favour  of 
shortening  the  hours  of  labour  to  not  more  than 
eight  hours  per  day,  or  forty-eight  hours  per  week, 
as  a  means  towards  the  absorption  of  many  of  those 
workers  who  are  at  some  seasons  of  the  year  thrown 
out  of  employment;  and  also  calls  upon  the  organised 
workers  of  the  United  Kingdom  to  make  this  one  of 

1  East  Ham  Echo,  Sept.  23,  1905. 
189 


Socialism  in  Local  Government 

the  test  questions  at  all  Parliamentary  and  municipal 
elections." 

For  some  years  past  various  local  Trades  Councils 
have  taken  part  in  municipal  elections,  and  have  run 
candidates,  but  with  the  development  of  the  Labour 
Representation  Committee  in  national  politics  there 
has  come  into  existence  nearly  a  hundred  similar 
local  municipal  committees.  These  local  Labour  Re- 
presentation Committees  achieved  remarkable  results 
in  the  municipal  elections  of  1906  and  1907.  The 
candidates  supported  must,  as  a  rule,  be  members 
of  a  bona-fide  trade  union,  the  Independent  Labour 
Party,  or  the  Social  Democratic  Federation. 

The  Sheffield  "Labour  Representation  Committee  " 
Municipal  Programme,  1906,  is  a  typical  example  of 
the  objects  of  these  Labour  Representation  Com- 
mittees : — 


Sheffield  L.R.C.  Municipal  Programme,   1905 
(SAME  FOR   1906). 

Working  Conditions  for  Corporation   Employe's. 

1.  A    forty-eight    hours    maximum    week    for    all 

Corporation  Employes. 

2.  A  25s.  minimum  weekly  wage  for  all  Corporation 

Employes, 

Housing. 

3.  Erection  of  Cottage  Property  upon  Corporation 

Lands  at  a  rental  within  the  means  of  a   25s. 
weekly  wage. 

190 


Labour  and  Politics 

4.  A  more  vigorous  application  of  Part  3   of  the 

Housing  Act,  1890. 

5.  The  providing  of  Municipal  Lodging  Houses. 

6.  A  Free  Water  Supply  for  Baths  and  "  Closets" 

in  all  Cottage  Property. 


Health. 

7.  Extension   of   Public   Baths,   with   Free   Water 

Supply,  and  a  material  reduction  in  charges 
for  Bathing,  and  the  provision  of  Free  Open- 
Air  Baths. 

8.  Free  Use  of  Baths  by  School  Children  during 

Summer  Holidays. 

9.  The  Corporation  to  be  responsible  for  a  Pure 

Milk  Supply  and  the  establishment  of  Infants' 
Milk  Depots. 

10.  That  the  Corporation  shall  provide  at  least  one 

meal  per  day  for  all  School  Children. 

11.  Special  Inspection  of  School  Premises — PubHc 

and  Private  —  also  Medical  Inspection  of 
Scholars  in  Council  and  Private  Schools. 

12.  Erection  of  a  sanatorium  for  Consumptives  by 

the  Local  Authority,  with  Free  Treatment  for 
the  Poor,  and  for  others  payment  according 
to  ability. 

Contracts. 

13.  "Conversions"  of  Privy  Middens  into  "Water 

Closets,"  the  work  to  be  executed  by  the 
Corporation. 

14.  Wherever  possible,  the  Corporation  to  employ 

191 


Socialism  in  Local  Government 

Labour  direct,  whether  in  Building  Construc- 
tion, or  in  Manufacture  for  its  own  uses,  so 
as  effectually  to  dispose  of  the  Contractor, 
and  shall  take  over  and  work  any  undertaking 
found  to  directly  benefit  the  Ratepayers,  and, 
further,  that  in  the  "  Fair  Wages  Clause,"  the 
Trade  Union  Rate  of  Wages  to  be  substituted 
for  the  "  Minimum  Rate." 

The  U}ieiuployed. 

15.  The  provision  of  suitable  work  for  the  Unem- 

ployed at  Fair  Rates  of  Wages. 

Finance. 

16.  That  the  Corporation  shall  receive  Loans  as  low 

as  ;^io,  at  3  per  cent,  interest,  subject  to 
three  months'  notice  of  withdrawal.  Interest 
to  be  payable  every  six  months. 

The  strength  which  can  be  brought  to  bear  at 
Municipal  Elections  in  favour  of  Labour  or  Socialist 
candidates  may  be  gauged  from  the  fact  that  the 
Labour  Representation  Committee  represents  over 
a  million  trade  unionists,  and  that  the  membership 
of  trade  unions  affected  by  municipal  ownership 
exceeds  300,000. 

Undoubtedly,  the  programme  advocated  by  Labour 
is  one  devised  wholly  in  the  interests  of  Labour,  and 
no  other  class.  It  is  naked  and  unashamed  in  its 
frank  avowal  of  such  Socialistic  objects  as  unlimited 
municipal  trading,  medical  inspection  and  feeding  of 
school  children,  an  eight  hours  day,  and  recognition 

192 


Labour  and  Politics 

of  "  The  Right  to  Work."  In  a  word,  Labour  is  not 
wiUing  to  accept  participation  without  predominance. 
It  wants,  not  a  share,  but  the  whole  benefit  at  the 
cost  of  the  rest  of  the  community. 

Another  aspect  is  the  corrupt  influence  brought  to 
bear  upon  Municipal  Councillors  by  municipal  em- 
ployes on  the  one  hand,  and  the  corrupt  appeals 
for  the  support  of  municipal  employes  made  by 
municipal  candidates  on  the  other.  With  the  growth 
of  municipal  enterprise  this  kind  of  corruption  has 
begun  to  spread  in  this  country.  The  Report  of  Mr. 
J.  W.  Sullivan  and  Professor  J.  R.  Commons  upon 
"  Labour  and  Politics,"  which  was  presented  to  the 
American  Civic  Federation  Commission  upon  Public 
Ownership  and  Operation,  showed  that  in  Glasgow 
"  the  pressure  of  applicants  upon  Councillors  for  their 
influence  is  extreme  and  continuous,  that  some  of  the 
Councillors  yield  to  it,  and  in  turn  press  upon  managers 
for  appointments,  and  that  applicants  who  have  the 
backing  of  Councillors  have  at  least  a  limited  ad- 
vantage over  other  applicants."  A  former  Labour 
member  of  the  Leicester  Town  Council  states  that  to 
his  personal  knowledge  ''  workmen  get  work  on  the 
Corporation  through  the  influence  of  Labour  and 
other  Councillors.  ...  In  fact,  many  workmen  vote 
for  Labour  men  in  hope  of  getting  work,  and  the 
candidate  has  encouraged  this  hope  of  getting  work 
when  seeking  workmen's  votes."  And  if  the  hoped-for 
work  is  not  found,  men  have  said  :  "  When  are  you 
going  to  get  us  a  job  ?  What  did  we  elect  you  for, 
if  not  to  get  work  ?  and  if  you  do  not  get  us  jobs 
we  shall  not  vote  for  you  again."  With  regard  to 
Sheffield,  the    Report   of    Mr.    J.   W.    Sullivan    and 

193  N 


Socialism  in  Local  Government 

Professor  Commons  states :  "  We  are  convinced 
from  the  statements  of  Councillors,  trade  union 
agents,  and  conductors  in  the  cars,  that  recommen- 
dations of  Councillors  are  an  important  requisite  in 
securing  positions  in  that  service  "  (tramways).  It  is 
to  be  observed  that  the  Report  concludes  with  the 
remark  that  this  undue  influence  excited  most  criti- 
cism "  where  the  policy  of  municipal  ownership  had 
been  carried  the  farthest." 

Sir  John  Ure  Primrose,  Lord  Provost  of  Glasgow, 
the  Mecca  of  Municipal  Trading,  stated  in  an  inter- 
view :  ^  "  We  have  reached  a  point,  however,  where 
we  begin  to  see  a  danger  ahead.  .  .  .  This  arises 
out  of  the  building  up  of  a  great  army  of  municipal 
employes.  ...  As  the  city  grows,  the  army  of 
employes  grows,  and  there  have  been  indications 
at  times  that  they  may  wield  a  power  in  the  dictation 
of  the  city  government  which  is  not  altogether  for 
the  best  interests  of  the  municipality.  For  instance, 
not  long  since,  one  of  our  Town  Councillors,  in  the 
course  of  his  official  duties  and  without  any  particular 
personal  prejudice,  was  impelled  to  take  certain 
action  which  was  not  relished  by  the  members  of 
the  police  force.  There  were  not  more  than  fifty  of 
the  constables,  perhaps,  who  lived  in  his  ward.  Yet 
you  can  readily  see  that  each  one  of  these  was  a 
recruiting  sergeant.  The  Councillor  was  not  wholly 
alive  to  the  danger,  and  he  was  actually  defeated 
through  the  efforts  of  the  paid  employes  of  the 
municipality.  .  .  .  The  multiplication  of  city  em- 
ployes ...  is  certainly  one  of  the  weak  spots  in 
our  municipal  ownership  programme." 

^  The  Daily  Trihme,  May  8,  1905. 
194 


Labour  and  Politics 

Speaking  in  opposition  to  the  Manchester  Cor- 
poration's Bill  on  February  6,  1906,  Councillor 
Meadowcroft  said  he  regarded  the  Tramways  Depart- 
ment as  a  weapon  of  corruption.  "  He  received 
applications  every  day  from  people  who  were  out 
of  work  and  who  expected  him  to  find  them  places 
under  the  Corporation  in  return  for  their  votes  at  the 
election  ;  they  always  said  they  voted  for  him  ! "  ^ 

There  is  only  one  conclusion  which  seems  to 
follow  from  these  facts,  that  the  influence  thus  used 
is  mainly  political.  In  the  natural  order  of  things 
a  workman  seeking  a  city  job  goes  to  the  Councillor 
whose  political  views  coincide  with  his  own,  or,  what 
is  more  probable,  the  local  political  association  or 
club  of  which  the  workman  is  a  member  is  a  medium 
for  the  application.  It  is  within  the  writer's  know- 
ledge that  in  one  Metropolitan  Borough  over  a  long 
period  of  years  not  a  single  workman  or  official 
was  appointed  under  the  Council  until  it  had  been 
ascertained  that  he  was  of  one  particular  political 
faith.  In  a  lesser  degree  the  same  practice  runs 
throughout  municipal  administration.  It  is  no  mere 
dream  of  timidity  that  Councillors  in  considering 
their  policy  have  to  take  counsel  of  fear,  and  are 
thus  prevented  from  governing  in  the  interests  of  all 
classes.  The  declaration  of  the  Fabian  Manifesto  is 
too  true,  that  "  at  present  in  many  places  nepotism 
and  the  use  of  municipal  appointments  to  reward 
electioneering  services  "  is  rampant. 

There  is  a  further  ugly  phase  of  the  attitude 
adopted  by  municipal  workers  in  local  administration. 
It    is    not   uncommon  for    municipalities   to    hold    a 

1  Alanchester  Guardian,  February  6,  1906. 


Socialism  in  Local  Government 

town's  meeting  of  ratepayers  to  decide  whether  or 
not  a  Bill  giving  further  powers  of  municipal  trading 
to  the  Corporation  shall  be  promoted  in  Parliament. 
In  many  cases,  this  antiquated  and  wholly  inade- 
quate method  of  ascertaining  public  opinion  has 
been  grossly  abused.  Often  the  meeting  is  badly 
advertised,  and  held  at  an  inconvenient  hour  of  the 
day.  No  hall  could  possibly  accommodate  all  the 
ratepayers  if  they  attended.  Generally,  only  a  small 
number  are  present  ;  sometimes  the  hall  has  been 
packed  with  municipal  employes  who  have  voted 
for  the  proposals  in  the  Bill.  As  the  Mancliester 
Courier  of  March  14,  1905,  stated:  *' The  employes, 
in  fact,  are  a  solid  body,  and,  as  was  illustrated  by 
the  votes  recorded  on  the  tramway  extension  pro- 
posals of  the  rejected  Corporation  Bill,  they  can  be 
relied  on  to  vote  in  their  own  interests."  To  take 
another  instance,  a  ratepayers'  meeting  was  held  at 
Nottingham  on  January  11,  1905,  to  consider  a 
Bill  promoted  by  the  City  Corporation  with  regard 
to  the  extension  of  tramways  and  waterworks. 
"  During  the  meeting  a  ratepayer  called  attention 
to  the  presence  of  so  many  Corporation  employes, 
and  asked  if  they  had  been  bidden  to  the  meeting." 
A  Mr.  G.  D.  Hazeldine  also  protested  against  the 
"  packing "  of  the  meeting,  and  in  a  letter  to  the 
Nottingham  Daily  Express,  on  January  16,  1905,  he 
said  :  "  I  contend  that  the  Corporation  ought  not  to 
do  anything  to  secure  the  attendance  of  its  servants, 
and  it  does.  It  is  an  open  secret.  It  is  widely 
known  that  men  w^orking  in  various  departments  of 
the  Corporation  service  get  the  tip  to  attend  these 
meetings,  and  got  the  tip  to  attend  this  one.      I  do 

196 


Labour  and  Politics 

not  think  that  can  be  denied.  It  is  inevitable  that 
many  of  them  should  have  the  idea,  perhaps  vaguely, 
first,  that  it  will  be  well  for  them  to  be  there ;  and, 
second,  that  it  will  be  well  for  them  to  vote  as  the 
Corporation  wishes  them  to  vote." 

In  one  of  those  long  views,  glimpses  into  the 
Socialist  future,  which  Mr.  Sidney  Webb,  the  idolater 
of  the  distant  day,  unveils  to  the  sight  of  ordinary 
mortals,  he  depicts  the  "  industrial  peace  "  which  is 
to  be  born  of  Administrative  Socialism. 

"  Where  industry  is  carried  on,  not  for  private 
profit  but  for  the  public  convenience,  it  is  obviously 
for  the  collective  public  to  determine  the  conditions 
of  employment.  A  labour  revolt  against  a  Town 
or  County  Council  elected  by  a  labour  vote  is  an 
obvious  absurdity.  In  the  final  stage  of  industrial 
organisation  the  ballot  box  logically  replaces  the 
strike,  and  '  industrial  peace,'  no  longer  tottering  in 
the  unstable  equilibrium  of  the  '  labour  war,'  rests 
at  last  'broad  based  upon  the  people's  will.'  "  ^ 

The  theory  that  labour  troubles  would  cease 
under  municipal  trading  has  been,  like  other 
Socialist  delusions,  utterly  shattered.  It  needs  but 
a  cursory  view  of  municipal  history  to  realise  that 
a  Council  and  its  employes  are  just  as  likely  to 
quarrel  as  any  other  industrial  association  of  in- 
dividuals. Of  the  series  of  strikes  which  have 
marked  the  course  of  municipal  enterprise  in  the 
last  few  years,  the  strike  of  the  Halifax  tramways 
employes  against  the  Corporation  in  September, 
1906,  affords  a  typical  lesson.  The  strike  con- 
tinued for  two  weeks,  and  this  important  industrial 

^   The  London  Programnie,  p.  84. 
197 


Socialism  in  Local  Government 

centre  was  the  scene  of  regrettable  outrages  ;  at- 
tempts were  made  to  derail  trams  ;  passengers  and 
tramway  servants  were  stoned. 

With  the  cause  of  the  strike,  and  its  attendant  inci- 
dents, we  are  not  concerned.  The  political  aspect  of 
it,  however,  is  too  important  to  be  overlooked. 

In  view  of  the  approaching  municipal  elections,  an 
active  agitation  was  maintained  by  the  tramwaymen. 
"  According  to  all  accounts,  Labour  is  to  contest  at 
least  ten  seats — Liberal  and  Tory  alike — and  two  of 
the  ex-tram  drivers  are  to  come  forward  as  candidates. 
There  is  talk  of  winning  ten  seats  now,  and  ten  seats 
next  time,  and  then  rewarding  Alderman  Hey  by 
ejecting  him  from  his  Aldermanic  seat."-^ 

This  attempt  at  coercion,  and  the  failure  of  the 
strikers  to  secure  their  demands,  excited  some  com- 
ment. One  local  Socialist,  in  fact,  gave  an  insight 
into  the  Socialistic  future  by  declaring  that  it  would 
not  be  difficult  "  to  make  out  a  strong  case  for  the 
illegality  of  strikes  under  the  municipality." 

It  may  be  observed  that  if  strikes  were  made 
illegal  in  the  case  of  municipal  workers,  as  the 
Socialist  proposes,  it  would  be  difficult  to  lay  an 
indictment  against,  say,  a  thousand  employes.  And 
what  would  the  trade  unions  think  of  any  legislation 
declaring  strikes  to  be  an  infringement  of  the  law  ? 

Looked  at  broadly,  the  evil  influence  of  service 
interests,  which  is  fostered  by  the  presence  of  a 
large  body  of  municipal  workers  in  a  town,  is  more 
destructive  than  under  private  enterprise.  In  the 
case  of  the  latter  only  the  particular  service  is 
directly  affected,  but  where  a  city  is  concerned  the 

^   The  Halifax  Gtiardiati,  22nd  Sept.  1906. 
198 


Labour  and  Politics 

whole  community  and  its  governing  body  are  parties 
to  the  quarrel  on  one  side  or  the  other.  Often 
leading  municipal  councillors  are  the  successful 
arbiters  in  a  strike  of  private  employes,  but  where 
the  Town  Council  and  the  citizens  are  themselves 
red-hot  disputants,  there  is  no  impartial  and  dis- 
interested person  to  act  as  peacemaker  and  judge. 
Government,  in  fact,  ceases  to  be. 

Clearly,  the  facts  we  have  been  considering,  the 
gradual  and  detailed  concession  to  Socialist  pro- 
positions, and  the  experience  thus  gained,  afford 
ample  proof  of  the  impracticability  of  Administra- 
tive Socialism.  It  involves  not  only  the  loss  of  such 
economic  liberty  as  now  exists,  but  the  destruction 
of  political  freedom.  Instead  of  purity  being  para- 
mount in  local  government  as  a  consequence  of 
municipal  trading,  the  tendency  is  all  the  other  way. 
What  is  the  moral  ?  Surely  it  is  this.  That  if  the 
cankerworm  of  corruption  hangs  now  from  the 
topmost  bough,  if  it  crawls  triumphant  through 
the  council  chambers  of  the  principal  cities  where 
municipal  trade  has  made  most  progress,  what  is 
to  happen  when  the  present  corps  of  municipal 
employes  grow  to  vast  armies  under  the  fostering 
spirit  of  unlimited  trading  ?  The  civic  policy  is  at 
the  present  time  sadly  bent  to  propitiate  the  demands 
of  the  municipal  workers.  It  is  an  evil  that  is  grow- 
ing every  day.  In  less  time  than  we  imagine,  local 
government  will  become  the  degraded  instrument 
of  selfish  ends ;  and  the  notorious  municipal  cor- 
ruption of  the  cities  of  the  United  States  will  be 
reproduced  here,  with  the  like  disastrous  results. 

199 


XIII 
MUNICIPAL   HOUSING 

When  we  come  to  deal  with  the  phase  of  municipal 
work  commonly  termed  "  Housing  of  the  Working 
Classes,"  we  are  face  to  face  with  an  intricate  pro- 
blem. The  Housing  Question,  at  the  outset,  was 
approached  by  local  authorities  solely  from  the 
governmental  point  of  view.  It  was  their  duty  to 
see  that  the  dwellings  provided  by  private  enterprise 
were  sanitary.  Under  certain  Public  Health  Acts, 
municipal  bodies  were  vested  with  powers  to  close 
buildings  "  unfit  for  human  habitation,"  unless  they 
were  repaired.  Power  was  also  given  to  erect  and 
maintain  improved  dwellings.  Motives  of  public 
health,  rather  than  ideas  of  municipal  trading,  ani- 
mated this  action.  Nevertheless,  the  gradual  exten- 
sion of  their  duties  in  regard  to  insanitary  dwellings 
and  the  proper  provision  of  houses  for  the  working 
classes,  has  brought  municipalities  into  competition 
with  private  house  builders.  We  are  far  from  saying 
that  the  housing  problem  did  not  need  the  serious 
attention  of  local  government.  The  situation  was 
so  serious,  and  the  peril  to  the  race  so  grave,  that  it 
demanded  the  vigorous  action  of  both  public  and 
private  enterprise.  The  indictment  to  be  laid  against 
local  bodies  is  that  they  did  not  enforce  those  sections 

200 


Municipal  Housing 

of  the  Acts  which  would  have  driven  owners  of 
insanitary  property  to  remedy  defects.  Instead  of 
placing  the  burden  of  providing  accommodation 
upon  private  individuals,  they  set  up  themselves  as 
builders  ;  discouraged  associations  and  societies  which 
were  doing  excellent  work  ;  and,  at  the  present  time, 
are,  to  all  appearance,  to  be  invested  with  full  power  to 
practically  monopolise  house-building  around  towns. 
The  law  relating  to  housing  was,  prior  to  1890, 
comprised  in  three  sets  of  Acts : — 

1.  Lord  Shaftesbury's  Act  (185 1),  which  enabled 

local    authorities    to    provide   lodging-houses 
for  letting  to  the  labouring  classes. 

2.  Mr.   Torrens's    Acts  (1868),  empowering  local 

authorities    to    deal    with    houses    unfit    for 
human  habitation. 

3.  Mr.  Cross's  Acts  (1875),  giving  the  local  bodies 

power  to  carry  out  improvement  schemes  for 

unhealthy    areas,    which    involved    municipal 

house  building. 

Under  the  first  two  classes  of  Acts  little  or  nothing 

was  done.      However,  a  not  inconsiderable  number 

of  schemes  were  carried  out  under  the  third  set  of 

Acts,  particularly  in  London. 

In  1884  a  Royal  Commission  on  the  Housing  of 
the  Poor  recommended  amendment  of  the  Acts  and 
reform  of  the  local  authorities  themselves. 

The  Housing  of  the  Working  Classes  Act,  1890, 
codified  previous  Acts,  with  many  improvements ; 
other  legislation  followed  in  1900  and  1903,  and 
these,  with  the  Public  Health  Act,  1891,  are  the 
principal  measures  dealing  with  the  question.  The 
chief  Act,  that  of  1890,  consists  of  three  main  parts. 

201 


Socialism  in  Local  Government 

Part  I.  gives  power  to  clear  large  insanitary  areas. 
If  satisfied  by  the  representations  of  a  medical 
officer  of  health  that  the  sanitary  defects  of  a  slum 
area  cannot  be  remedied  otherwise  than  by  re- 
arrangement and  reconstruction  of  the  streets  and 
houses,  the  local  authority  prepares  a  scheme,  which 
has  to  be  confirmed  by  a  Secretary  of  State  and 
Parliament.  By  the  Act  the  local  authority  is 
required  to  provide  accommodation  for  at  least  as 
many  persons  of  the  working  classes  as  may  be 
displaced,  but  the  Secretary  of  State  may,  on  the 
application  of  the  local  authority,  dispense  with  the 
obligation  to  an  extent  not  exceeding  one  half. 
Part  II.  deals  with  small  areas.  Part  III.  is  most 
important.  It  gives  power  to  local  authorities  to 
buy  land  for  the  purpose  of  erecting  houses  for 
the  working  classes.  And  it  is  chiefly  in  connection 
with  the  exercise  of  this  power  that  local  authorities 
have,  at  times,  come  into  conflict  with  private  enter- 
prise, and  brought  Municipal  Housing  into  the 
category  of  Municipal  Trading. 

Nevertheless,  the  work  accomplished  under  Parts 
I.  and  II.  is  not  without  some  bearing  upon  the 
subject.  At  certain  points  it  has  entered  into  com- 
petition with  private  philanthropic  effort,  and,  on 
the  whole,  the  manner  in  which  it  has  been  carried 
out  has  some  bearing  upon  the  question  whether  local 
authorities  are  capable  of  conducting  the  business  of 
house  providers. 

Taking  a  broad  survey,  it  cannot  be  said  that 
municipal  house  building  has  made  any  real  impres- 
sion upon  the  bulk  of  the  problem  known  as  "  over- 
crowding."    So  far  as  the  clearance  of  slums   and 

202 


Municipal   Housing 

the  enforcement  of  sanitary  laws  is  concerned, 
improvement  is  discernible  in  the  condition  of  the 
dwellings  of  the  poor.  But  that  any  actual  decrease 
in  overcrowding  has  taken  place  as  the  result  of 
municipal  house-building  is  not  capable  of  proof. 
Other  and  more  successful  agencies  have  been  at 
work  between  1891  and  1901  to  produce  the  decrease 
of  the  overcrowded  class  from  11.2  to  8.2  per  cent, 
of  the  population.  In  reality,  the  overcrowding 
problem  is  due  not  so  much  to  lack  of  accommoda- 
tion as  to  inability  or  unwillingness  to  pay  for  what 
the  law  considers  to  be  proper  house  room.  The 
low  economic  condition  of  the  overcrowded  poor 
prevents  both  municipal  and  private  enterprise  from 
catering  for  their  needs,  except  on  a  charitable  basis. 
The  operations  of  local  authorities  in  large  towns, 
and  notably  in  London,  under  Parts  I.  and  II.  of 
the  Housing  Act,  1890,  is  aptly  described  by  Mr. 
Bernard  Shaw  in  his  discussion  of  "  Housing  Diffi- 
culties " :  "At  present  it  (the  local  authority)  has  to 
throw  economics  to  the  winds  by  buying  land  at  its 
real  market  value,  and  charging  it  to  its  housing 
schemes  at  its  value  for  working  class  dwellings  (a 
pure  figment),  the  ratepayer  making  up  the  differ- 
ence between  this  and  the  real  market  value.  Having 
performed  this  conjuring  trick,  the  municipality 
generally  proceeds  to  pass  a  resolution  that  the 
dwellings  shall  be  let  at  rents  sufficient  to  prevent 
any  loss  coming  upon  the  ratepayers,  without  men- 
tioning that  they  have  already  borne  a  loss  which 
does  not  appear  in  the  housing  accounts.  Even 
then,  the  effect  of  the  resolution,  when  it  is  strictly 
carried  out,  is  to  put  the  rents  too  high  for  the  sake 

203 


Socialism  in  Local  Government 

of  enabling  the  Borough  Treasurer  to  make  a  de- 
lusive demonstration  that  the  dwellings  are  paying 
their  way  commercially."  As  a  matter  of  fact, 
the  obligation  exists  that  the  rents  shall  not  be 
below  those  prevailing  in  the  neighbourhood  of  the 
municipal  dwellings. 

Financially,  housing  schemes  in  the  centre  of 
cities  always  involve  a  charge  upon  the  rates.  Each 
municipal  tenant  is  really  receiving  a  grant  in  aid  at 
the  expense  of  the  community.  Speaking  of  the 
London  County  Council  housing  operations.  Sir 
J.  W.  Benn,  M.P.,  L.C.C.,  confesses  that  "to  build 
and  run  municipal  dwellings  on  a  finance  which 
involves  a  charge  upon  the  rates,  must  end  in  failure 
and  disappointment  ;  charity  rents  mean  a  subsidy 
to  wages,  and  the  working  of  the  old  Poor  Law 
teaches  us  what  that  means."  ^ 

As  to  the  effect  of  these  schemes,  we  may  take 
London  as  a  typical  example  of  what  is  happening 
in  most  of  our  great  towns  where  similar  work  is 
being  done. 

The  number  of  the  overcrowded  class  in  London 
was  stated  in  1890  to  be  about  800,000.  That  is 
to  say,  one  of  every  five  persons  living  in  London 
w^as  housed  in  an  insanitary  condition.  The  London 
County  Council  inherited  a  few  housing  schemes 
from  its  predecessor,  the  Metropolitan  Board  of 
Works.  The  Council's  policy  up  to  1904  was  to 
try  and  solve  the  overcrowding  problem  by  means 
of  the  clearance  of  insanitary  areas,  and  the  provi- 
sion of  new  dwellings  for  the  poor.  Up  to  1898, 
the    Council's    efforts     to     lessen     the     number     of 

^   Our  London. 
204 


Municipal  Housing 

overcrowded  people  were  futile,  inasmuch  as  a  Return 
issued  by  the  Council  in  October,  1899,  showed  that 
the  Council  had,  under  Parts  I.  and  II.  of  the  Act, 
unhoused  and  proposed  to  unhouse  some  18,000 
people,  and  had  provided  or  proposed  to  provide 
dwellings  for  only  11,256.  Thus,  instead  of  re- 
lieving the  congestion,  the  action  of  the  Council  had 
resulted  in  making  matters  worse,  as  they  destroyed 
more  accommodation  than  they  provided. 

Mr.  George  Haw,  a  Socialist,  in  his  book.  No  Room 
to  Live  (1899),  thus  described  the  record  of  the 
London  County  Council.  "  In  their  various  schemes 
they  have  driven  out  some  24,000  people,  but  have 
barely  built  houses  for  10,000.  What  of  the  re- 
maining 14,000  among  the  driven  out  ?  Nay,  more 
than  14,000,  for  we  have  already  seen  how  very  few 
of  the  people  displaced  ever  return  to  the  new 
buildings"  (p.  57). 

As  regards  the  action  of  the  London  County 
Council  under  Parts  I.  and  II.  of  the  Act,  it  is  clear 
that  more  harm  than  good  was  done,  because  many 
poor  people  were  unhoused,  and  a  less  number 
provided  for  in  the  new  houses,  built  four  or  five 
years  afterwards.  In  the  case  of  the  Boundary 
Street  Dwellings,  out  of  5719  people  displaced, 
only  II  came  back  to  the  new  dwellings.  Further- 
more, the  new  houses,  as  a  rule,  were  too  highly 
rented  for  the  overcrowded  poor  to  be  able  to  live 
in  them.  Thus,  when  the  slums  were  cleared,  after 
long  delays,  the  usual  effect  was  that  the  evicted 
inhabitants  crowded  into  the  surrounding  streets 
and  created  fresh  slums.  As  a  Sanitary  Inspector  of 
Bethnal  Green  said  :  "  The  London  County  Council 

205 


Socialism  in  Local  Government 

has  done  nothing  to  relieve  the  problem.  All  their 
work  is  like  stirring  water  in  a  pail.  You  shift  the 
water,  but  you  do  not  lessen  its  bulk.  The  London 
County  Council  shift  the  overcrowded  poor,  but 
they  do  not  lessen  their  numbers." 

The  financial  result  of  these  slum  clearances  may 
be  gauged  from  a  table  compiled  by  the  London 
County  Council  and  printed  in  the  Report  of  the 
Royal  Commission  on  London  Trafhc.  The  Table 
shows  that  on  central  London  schemes  the  rate- 
payers have  borne  a  loss  of  ^412,683  in  rehousing 
7586  persons  on  i8i  acres. 

In  connection  with  this  work,  the  action  of  the 
London  County  Council  no  doubt  discouraged  the 
efforts  of  semi-philanthropic  building  companies, 
like  the  Peabody  Trust,  the  East  End  Dwellings 
Company,  and  the  Artisans'  Dwellings  Company. 
The  serious  slackening  in  their  activity  during  the 
past  decade  is  due  in  some  measure,  not  only  to 
municipal  interposition,  but  to  the  cost  of  building 
and  to  the  recognition  that  better  means  of  transit 
furnished  the  best  solution  of  the  overcrowding 
question. 

On  the  other  hand,  there  is  no  ground  for  alleg- 
ing, as  municipal  traders  are  fond  of  doing,  that  pri- 
vate enterprise  has  failed,  and  that,  therefore,  civic 
action  is  necessary.  Short  of  "  charity  "  or  nominal 
rents,  neither  private  nor  municipal  effort  can  solve 
the  difficulty  of  housing  "  the  submerged  tenth." 
Unity  of  purpose,  and  cordial  co-operation  between 
local  authorities  and  individuals,  might  lead  nearer 
to  success,  but  this  spirit  has  so  far  been  absent. 
Impracticable     bye-laws     and     building    regulations 

206 


Municipal   Housing 

have  pla^xd  a  large  part  in  stultifying  private  enter- 
prise ;  the  cost  of  land  and  building  materials,  and 
the  rise  in  wages,  have  all  added  to  the  difficulty. 
In  spite  of  these  drawbacks,  private  enterprise  can 
still  successfully  compete  with  municipalities  in  pro- 
viding cheap  dwellings  for  the  working  classes. 

After  1898,  the  London  County  Council  decided 
to  use  Part  III.  of  the  Act  of  1890,  and  to  buy  vacant 
land  in  the  suburbs  for  the  purpose  of  erecting  work- 
men's cottages.  It  was  at  this  stage  that  the  Council 
challenged  private  enterprise,  because  their  action 
was  on  all  fours  with  that  of  the  private  builders  who 
were  constructing  houses  of  a  similar  character  to 
supply  a  similar  class  of  the  population.  Of  course, 
during  the  development  of  the  municipal  estates 
heavy  losses  were  incurred  on  account  of  interest 
and  sinking  fund  payments.  Apart  from  this 
financial  loss,  private  enterprise  at  Tottenham  was 
able  to  provide  more  extensive  accommodation  at  a 
cheaper  rate  than  the  Council.  Mr.  W.  W.  Bruce, 
a  prominent  member  of  the  London  County  Council, 
admitted  ^  that  the  cost  of  the  Council's  cottages  was 
too  high  "  to  enable  them  to  be  let  as  cheaply  as 
private  dwellings."  In  connection  with  other  estates, 
development  has  been  exceedingly  slow,  and  the 
losses  on  "empties"  are  exceptionally  heavy.  In 
the  year  1906-7  the  total  loss  of  income  due  to 
"empties"  was  ;^24,988  or  9.55  per  cent,  of  the 
gross  rental.  On  eight  estates  the  loss  varied  from 
22.94  per  cent,  at  Totterdown,  to  64.68  at  Briscoe 
Buildings.  Accommodation  was  provided  to  March, 
1907,    for    41,602     persons,    and    the    number     of 

^  May  23,  1905. 
207 


Socialism  in  Local  Government 

persons  in  occupation  was  only  26,347.  Mainly 
in  connection  with  estates  in  course  of  development, 
a  sum  of  _^44,8oi  has  been  contributed  from  the 
rates  to  meet  annual  deficiencies.  This  loss  would 
have  been  larger,  but  surpluses  on  other  schemes 
have  reduced  it  by  ;^  14,393.^ 

Summing  up  his  investigation  into  the  London 
Housing  Problem,  Mr.  Charles  Booth  states  : — 

"The  futility  of  municipal  action  for  the  direct 
supply  of  dwellings  on  the  scale  hitherto  adopted  is 
patent,  and  the  dangers  of  this  course,  if  pursued  far, 
are  very  serious.  By  confining  the  corporate  efforts 
of  the  community  to  the  task  of  making  the  means 
of  communication  comprehensive  and  adequate  and 
efficient,  private  enterprise  would  be  encouraged  to 
provide  all  the  houses  needed,  and  to  private  enter- 
prise the  local  authorities  would  do  well  to  relinquish 
that  portion  of  the  tremendous  task  of  reorganisation 
and  reconstruction  on  which  the  welfare  of  the 
people  of  London  depends." 

A  statement  of  the  receipts  and  expenditure  in 
connection  with  housing  work  appears  to  show  a 
small  profit.  It  is  urged  by  many  municipal  traders 
that  the  ordinary  revenue  is  always  adequate  to  cover 
the  ordinary  outlay.  That  plea  cannot,  however,  be 
accepted,  because  a  little  inquiry  will  at  once  disclose 
expenditure  which  is  omitted  from  these  housing 
accounts.  The  circumstances  connected  with  the 
financial  operation  of  municipal  housing  are  involved 
in  almost  inextricable  confusion.     As  we  have  seen, 


1  London  County  Council  Annual  Report  on  Working  C-ass  Dwellings, 
1907. 

*  Life  and  Labour  in  London,  final  vol.,  p.  190. 

208 


Municipal   Housing 

the  main  cost  of  slum  clearance  schemes  is  charged 
to  the  improvement  account,  and  the  market  value 
of  the  land  is  written  down  to  a  small  sum  which 
will  enable  workmen's  dwellings  to  be  erected  with- 
out showing  a  serious  loss  in  the  housing  accounts. 
It  may  be  noted  that  the  Local  Government  Auditor 
has  had  occasion  to  rebuke  the  London  County 
Council  for  departing  from  this  practice  and  charging 
to  the  housing  account  as  the  value  of  the  cleared 
sites,  sums  even  less  than  the  valuer's  reduced 
estimate.  The  Auditor  expresses  the  hope  "that 
the  Council  will  give  instructions  for  transfers  repre- 
senting full  housing  values  to  be  made  between 
the  different  accounts,  as  it  would  appear  that  the 
diih'lli)igs  capital  accou)its  have  been  considerably  under- 
cliargcd." 

The  case  of  London  varies  only  in  degree  from 
that  of  other  large  towns.  Addressing  the  Annual 
Meeting  of  the  Manchester  Labourers'  Dwelling 
Company,  Ltd.,  Mr.  James  Fildes,  Chairman  of  the 
Manchester  Corporation  Housing  Committee,  said 
that  "  he  would  like  to  impress  upon  the  citizens  of 
Manchester  that  it  was  their  duty  to  take  up  the 
question  of  housing  the  working  classes  in  their 
own  hands,  and  not  leave  it  entirely  to  the  Corpora- 
tion, which  had  to  face  difficulties  in  the  matter 
from  which  private  enterprise  was  free,  and  could 
not  work  concerns  like  that  without  incurring  a  loss. 
On  the  other  hand,  that  Company  had  shown  that 
it  was  possible  to  work  them  privately,  and  at  the 
same  time  earn  a  dividend,  as  they  had  done  for 
some  years."  ^ 

^  Manchater  Evening  News,  December  13,  1904. 

209  O 


Socialism  in  Local  Government 

The  municipal  housing  schemes  of  Manchester 
are  not  carried  out  on  a  commercial  basis,  but  "  as 
part  of  a  great  work  of  sanitary  amelioration."  The 
rates  are  used  in  aid  of  this  work. 

For  some  years  the  Birmingham  Corporation 
Housing  Accounts  omitted  any  charge  for  the  land 
on  which  the  municipal  houses  stand.  As  the  result 
of  inquiries  it  was  found  that,  when  the  cost  of  the 
land  was  included,  *'  Birmingham's  municipal  housing 
schemes,  hitherto  supposed  to  make  a  profit,  were 
really  a  charge  on  the  rates."  ^  This  method  of 
accountancy  is  not  singular,  but  generally  adopted 
by  municipalities.  Of  course  if  private  builders 
could  thus  escape  the  initial  cost  of  the  land,  they 
could  provide  very  cheap  dwellings. 

In  fact,  it  cannot  be  reasonably  contended  that 
Municipal  Housing  is  carried  on  at  a  profit.  Alder- 
man W.  Thompson,  the  President  of  the  National 
Housing  Reform  Council,  admits  that,  under  present 
circumstances,  it  is  almost  impossible  to  house  the 
very  poor  in  healthy  homes  and  at  the  same  time 
make  a  commercial  profit. 

This  state  of  things  has  no  doubt  deterred  many 
local  bodies  from  taking  action  under  the  Housing 
Acts.  For  instance,  very  few  applications  to  County 
Councils  have  been  made  by  Rural  District  Councils 
wishing  to  use  Part  III.  of  the  Act  of  1890.  Owing 
to  the  small  rateable  value  of  rural  districts,  any  loss 
would  cause  a  serious  rise  in  the  rates.  "The  result 
is  that  municipal  trading  cannot  justify  itself  by  its 
results  in  this  direction."  The  most  that  a  local 
authority  can  do  is  to  try  "  to  come  to  the  rescue  in 

^  Nettlefold,  A  Housing  Policy,  p.  32. 
210 


Municipal  Housing 

cases  and  districts  where  unscrupulous  persons  are 
taking  advantage  of  any  local  or  general  house 
famine  "  (J.  Benn).  So  far,  however,  the  abolition 
of  house  famines  has  been  beyond  the  power  of  local 
authorities. 

The  position  has  been  thus  well  summed  up  by 
Mr.  Nettlefold  in  his  pamphlet  on  A  Housing  Policy  : — 

"  I.  It  is  thought  that  municipal  house  building 
will  reduce  rents,  because  a  Corporation  can  borrow 
money  cheaper  than  a  private  individual.  But  in 
spite  of  this  advantage,  experience  shows  that  muni- 
cipal house  building  is  more  expensive  than  any 
other. 

"  2.  Municipal  houses  are  often  let  at  cheaper 
rents  than  the  surrounding  houses  ;  but  this  is  only 
done  by  making  a  loss  on  the  transaction.  If  the 
governing  body  could  raise  sufficient  money  to  house 
all  the  citizens,  municipal  house  building  would 
simply  result  in  the  population  paying  more  in  rates 
and  less  for  the  other  items  that  go  to  make  up 
house  rent  ;  but,  as  the  Corporation  can  only  house 
a  very  small  proportion,  municipal  house  building 
must  always  in  the  future,  as  it  has  done  in  the  past, 
result  in  taxing  the  many  for  the  benefit  of  the  few. 

"  3.  The  evidence  shows  that  rate-aided  competi- 
tion in  house  building  and  letting  will  drive  every 
one  else  out  of  the  trade,  with  the  result  that  we 
shall  have  fewer  houses  provided  in  proportion  to 
the  demand,  thereby  creating  a  house  famine,  which 
is  just  what  every  one  wishes  to  avoid.  Since  the 
decision  of  the  Council  (Birmingham)  last  summer 
to  hold  its  hand  with  regard  to  municipal  house 
building,  schemes  for  the  erection  of  flats  have  been 

21 1 


Socialism  in  Local  Government 

started  by  Homes  (Limited)  and  Cregoe  Colmore,Esq., 
at  rentals  varying  from  3s.  to  5s.  3d.  per  week. 

"  4.  It  is  urged  that  the  governing  body  ought 
to  provide  good  cheap  houses  for  those  who  really 
cannot  afford  to  pay  the  ruling  prices  for  new 
houses.  The  difficulty  is  to  find  out  the  respectable 
poor.  Every  one  experienced  in  philanthropic  work 
knows  how  strenuously  these  people  maintain  their 
independence.  They  would  not  go  to  the  Corpora- 
tion, the  Corporation  would  have  to  try  and  find 
them — a  most  difficult  thing  to  do.  People  who 
apply  for  Corporation  houses  will  not  all  be  those 
who  have  the  greatest  need  for  assistance,  and  the 
inquiry  necessary  to  get  at  the  truth  would  be  of 
such  an  inquisitorial  nature  that  no  governing  body 
could  undertake  it.  Experience  has  shown  that 
municipal  houses  are  filled  up  immediately  by  those 
for  whom  they  were  never  intended.  If,  on  the 
other  hand,  an  inquiry  was  thoroughly  carried  out, 
and  the  limit  of  wages  for  municipal  tenants  fixed, 
then  there  would  be  a  gross  injustice  done  to  those 
men  just  above  the  limit,  and  they  would  have  every 
inducement  to  earn  lower  wages,  which  is  exactly 
contrary  to  what  all  reformers  are  working  for. 

"  5.  In  connection  with  the  foregoing,  it  may  be 
remarked  that  municipal  house  building  is  a  form 
of  rate-aided  charity  to  the  poorest  class  of  the 
town.  This  charity  comes  out  of  the  rates,  which 
are  compulsorily  collected  from  all  classes  of  the 
community,  either  directly  or  indirectly  in  the  form 
of  rent.  The  increased  rates  necessitated  by  muni- 
cipal house  building  will  press  most  heavily  on  the 
large  class  just  above   '  the  poverty  line,'  and  with 

212 


Municipal  Housing 

increases  for  other  purposes  force  many  below  it. 
Thus  the  result  will  be  to  still  further  increase,  in- 
stead of  diminish,  the  proportion  of  the  population 
for  whom  it  is  suggested  rate-aided  houses  should  be 
built. 

"  6.  Supposing  that  municipal  house  building  did 
result  in  reducing  rents  all  over  the  city,  this  would 
only  have  the  effect  of  subsidising  employers  of 
labour.  It  is  a  well-known  fact  that  wages  follow 
rent.  If  rents  go  down,  wages  will  also  go  down  ; 
and  only  the  employers  of  labour  will  benefit.  The 
evidence  shows  that  there  are  many  people  who  will 
only  do  just  enough  work  to  keep  body  and  soul 
together  ;  lower  house  rents  would  only  encourage 
these  to  work  less,  and  earn  less  money.  Another 
effect  of  reducing  rents  in  the  city  would  be  to 
tempt  unskilled  labour  into  the  town.  This  would 
seriously  injure  the  workers  now  in  the  city  by  making 
competition  for  employment  in  the  city  keener  than 
ever.  If  the  physique  of  Englishmen  is  to  be  main- 
tained and  improved,  everything  possible  must  be 
done  to  get  people  back  to  the  country." 

The  Town-Planning  Bill  which  is  now  before 
Parliament  will  probably  invest  large  powers  in  the 
municipalities  with  regard  to  the  development  of 
suburban  areas.  The  German  plan  may  be  adopted 
in  principle.  Municipalities  will  become  great  land- 
owners and  be  responsible  for  the  provision  of  suit- 
able houses  for  all  classes.  The  choice  will  then  be 
clearly  before  them:  (i)  to  build  themselves,  or  (2) 
to  enlist  the  co-operation  of  private  companies  and 
individuals,  by  inviting  them   to   erect   and   manage 

213 


Socialism  in  Local  Government 

dwellings  upon  sites  leased  to  them  upon  reason- 
able and  proper  conditions  which  will  secure  good 
accommodation  for  all  classes  at  fair  rents. 

Let  us  consider  a  few  arguments  for  and  against 
municipal  house  trading  as  it  may  present  itself  in 
the  future.  As  we  have  seen,  experience  indicates 
that  adoption  of  the  first  plan  would  not  be  suc- 
cessful from  a  financial  point  of  view.  There  is, 
moreover,  a  more  serious  factor  to  be  considered — 
Whether  the  municipalities  will  be  able  to  purchase 
the  land  on  the  outskirts  of  the  towns  at  such  a 
price  as  to  allow  of  economical  house  building. 
Obviously,  local  authorities  are  not  good  buyers. 
They  nearly  always  pay  more  than  a  private  pur- 
chaser, notwithstanding  the  efforts  of  the  legislature 
to  guard  them  against  the  superior  business  capacity 
of  landowners.  It  may  be,  however,  that  the  State 
will  take  drastic  steps  to  break  up  land  monopoly 
around  growing  towns.  But  this  would  help  private 
house  builders  equally  with  municipalities. 

It  is  further  argued  by  municipal  traders  that 
local  authorities  build  better  houses.  Again,  ex- 
perience shows  the  reverse  to  be  the  case.  If  the 
municipal  house  is  occasionally  superior  in  ornamen- 
tation, it  bears  a  higher  rental.  Moreover,  under  the 
general  Building  Regulations  laid  down  by  local 
authorities,  there  is  little  room  for  jerry-building. 
Under  equal  building  laws,  the  municipal  house 
builder  would  have  no  advantage  over  a  private 
builder. 

Turning  to  the  question  of  cost,  here  again  it  is 
very  doubtful  whether  municipalities,  by  employing 
contractors   to   build  for   them,    would   obtain    such 

214 


Municipal  Housing 

good  terms  as  private  builders.  Extravagance  in 
detail  is  the  bane  of  municipal  housing,  and  com- 
mercial considerations  seldom  hamper  the  decisions 
of  councillors  when  considering  plans  and  the  class 
of  house  to  be  provided.  The  invariable  tendency 
of  governing  bodies  to  irresponsibility  contributes  to 
make  all  municipal  work  more  costly  than  the  same 
work  in  private  hands.  If  the  municipalities  decide 
to  set  up  a  Works  Department  and  to  build  by  direct 
employment,  the  expense  will  be  far  heavier  than  if 
contractors  are  employed. 

Not  the  least  mischievous  consequence  that  would 
follow  from  a  municipality  assuming  the  whole  re- 
sponsibility of  supplying  houses,  is  the  discouraging 
effect  it  would  have  upon  the  growing  efforts  which 
the  working  classes  are  now  making  to  work  out 
their  own  salvation.  Apart  from  the  steady  growth 
of  building  societies,  whose  useful  work  no  one  can 
gainsay,  we  have  garden  cities,  garden  suburbs,  and 
tenants'  house  purchase  associations,  developing  with 
remarkable  rapidity.  This  individualist  enterprise 
involves  no  charge  upon  the  rates,  and  affords  a  far 
better  solution  of  the  housing  difficulty  than  any 
municipal  propositions,  which,  if  embarked  upon, 
would  only  check  self-help  without  furnishing  any 
better  remedy. 

By  far  the  most  important  objection  to  municipal 
house  building  is  the  possibility  of  corrupt  influ- 
ences being  introduced.  The  relation  of  private 
landlords  and  tenants  are  not  by  any  means  satis- 
factory. There  is  generally  a  feeling  of  resentment 
against  landlords  ;  and  any  one  who  has  had  experi- 
ence of  estate  management  can  testify  to  the  difficulty 

215 


Socialism  in  Local  Government 

of  meeting  the  unreasonable  and  curious  demands 
of  occupiers.  What  would  be  the  position  of 
a  municipahty  with  fifty  thousand  tenants,  each 
with  voting  power  and  some  grievance  to  be 
remedied  ?  Would  the  councillors  be  able  to  re- 
sist the  undue  pressure  of  a  Tenants'  League, 
brought  to  bear  on  the  verge  of  an  election  in 
order  to  secure  a  reduction  of  rents  or  some  other 
concession  ?  On  the  other  hand,  would  the  muni- 
cipal tenants  be  able  to  ignore  the  tempting  offer 
of  a  placard,  issued  by  a  candidate,  "  Vote  for  Smith 
and  lower  rents  "  ? 

There  is  every  inducement  to  candidates  to  make 
promises  of  better  conditions  of  tenancy  where 
municipal  estates  exist.  Each  ward  of  a  municipal 
estate  will  be  animated  by  personal  considera- 
tions, and  regard  for  the  general  welfare  will  be 
forgotten.  The  dire  example  furnished  by  dockyard 
constituencies  during  Parliamentary  elections  ought 
to  preclude  municipalities  from  venturing  to  assume 
the  dangerous  position  of  universal  house  providers. 

Again,  the  rigid  rules  and  regulations  which  muni- 
cipal authorities  usually  lay  down  for  what  they 
deem  to  be  the  proper  conduct  of  their  tenants  are 
likely  to  lead  to  intense  irritation.  The  different 
likes  and  dislikes  of  people  will  not  receive  the 
same  careful  consideration  from  the  municipal  land- 
lord as  from  the  private  owner.  Types  of  houses 
will  be  stereotyped,  and  as  municipalities  are  seldom 
capable  of  intelligently  anticipating  and  rapidly  pro- 
viding for  future  requirements,  the  supply  of  houses 
will  sometimes  be  in  front  of,  but  more  often  be 
far  behind,  the  demand. 

216 


Municipal  Housing 

Generally,  the  conclusion  must  be  that  a  muni- 
cipality ought  not  to  become  a  general  house 
provider.  The  enormous  capital  required,  the  cost 
of  management,  the  burden  of  other  duties,  and 
the  danger  of  corruption,  are  overwhelming  objec- 
tions to  this  form  of  municipal  trading.  Town- 
planning  is  needed,  but  this  can  be  secured  without 
municipal  ownership  of  town  suburbs.  The  provision 
of  better  class  houses  may  well  be  left  to  private 
persons.  As  regards  workmen's  dwellings,  munici- 
palities might  with  advantage  enlist  the  aid  of 
industrial  dwellings  and  other  semi-philanthropic 
companies.  The  co-operation  of  workmen's  co- 
partnership associations  for  housing  purposes  might 
also  be  invoked.  Modification  of  the  building  regu- 
lations, with  a  view  to  lessening  the  cost  of  building 
without  lowering  its  quality,  should  also  be  made. 

Finally,  it  is  necessary  for  all  to  recognise  that 
the  establishment  of  quick  and  cheap  means  of 
transit  in  and  around  towns  is  the  key  to  cheap 
and   sufficient  housing. 


217 


XIV 

MUNICIPAL     WORKS 
DEPARTMENTS 


The  chief  advantages  and  disadvantages  of  the 
direct  employment  of  labour  by  municipalities  have 
been  already  discussed.  We  have  seen  how  the 
attempted  ''  substitution  of  the  spirit  of  service  for 
the  spirit  of  gain  "  in  municipal  enterprise  has  failed, 
because  of  the  lack  of  an  impelling  motive  to  give 
good  service.  ''High  wages,  low  work"  briefly 
sums  up  the  conscious  and  unconscious  spirit  of 
Government  employes.  But  here,  perhaps,  before 
the  finish  of  this  study  of  municipal  trade,  it  may  be 
well  to  examine  a  little  more  closely  into  the  history 
of  Municipal  Works  Departments,  which  are  rapidly 
becoming  an  extinct  species  of  civic  effort.  Some 
half-a-dozen  municipalities  have,  at  various  times, 
made  experiments  in  this  direction,  but  one  by  one 
these  Departments  have  been  closed  down,  and  there 
is  now  only  one  in  existence,  that  belonging  to  the 
Metropolitan  Borough  of  Battersea.  One  case  is 
typical  enough  of  the  rest,  and  we  will  therefore  take 
the  London  County  Council  Works  Department  as 
our  object-lesson. 

In  the  first  place,  it  is  necessary  to  consider  care- 
fully  the   circumstances   under  which    these  Works 

218 


Municipal  Works  Departments 

Departments  have  been  called  into  existence.  The 
excuse  invariably  has  been  that  it  is  not  possible  for 
officials  to  properly  scrutinise  contract  works  and  to 
avoid  fraud  ;  that  the  contractors'  tenders  for  work 
are  occasionally  abnormally  high,  indicating  the  for- 
mation of  a  ring  against  the  municipality  ;  or  that 
corruption  of  councillors  and  officials  has  led  to  bad 
work.  Admitting  the  presence  of  these  evils  to 
a  mild  extent,  we  may  ask  what  does  that  set  of 
conditions  imply  ?  The  answer  is — Corruption  and 
inefficiency  in  the  municipal  members  and  officials 
as  well  as  in  the  contractor.  Therefore,  at  the  out- 
set, we  may  well  question  whether  that  spirit  will 
vanish  by  the  substitution  of  municipal  for  contract 
labour.  The  abolition  of  the  private  builder  removes 
one  temptation,  but  introduces  many  others.  For  a 
Works  Department  has  to  deal  with  twenty  firms  to 
purchase  building  materials.  The  risk  of  fraud  and 
corruption  is  thus  increased.  Certainly,  all  experi- 
ence proves  that  corruption  and  inefficiency  will  break 
out  in  another  form.  With  a  mere  change  of  con- 
ditions the  evil  assumes  another  shape.  It  is  useless 
to  contend,  as  is  often  done,  that  the  first  step  in 
bribery  comes  from  the  contractor.  It  is  quite 
as  often  the  municipal  councillor  or  official  who 
makes  the  corrupt  suggestion.  It  is  frequently  the 
official  who  inspects  the  goods  or  handles  the  tenders 
who  is  able  to  levy  blackmail.  If  the  local  merchant 
and  builder  are  favoured  for  sundry  considerations, 
their  municipal  employers  are  participators,  and,  in 
most  cases,  the  tempters. 

The  suggestion,  too,  that  municipal  ownership  is 
most  helpful  "  in  regenerating  cities  that  are  tainted 

219 


Socialism  in  Local  Government 

with  bad  politics,"  is  contradicted  by  experience. 
The  good  reputation  of  British  local  government 
existed  long  before  municipal  trading  attained 
serious  proportions.  Indeed,  there  are  strong  indi- 
cations that  a  set-back  in  municipal  morality  has 
taken  place  in  recent  years,  a  decadence  which 
may  be  imputed  in  part  to  the  overloading  of  local 
government  by  the  multifarious  branches  of  muni- 
cipal trade,  and  the  consequent  exclusion  from  it 
of  able  and  reputable  men  of  high  standing. 

We  are  justified,  then,  in  suggesting  that  there  is 
no  remedy  for  corruption  in  the  establishment  of 
Municipal  Works  Departments  ;  the  very  fact  of  for- 
saking private  enterprise  implies  a  defect  in  the 
local  authority  which  will  sooner  or  later  be  re- 
flected in  its  Works  Department. 

For  it  is  a  grave  confession  of  weakness  when 
local  government  complains  of  its  inability  to 
properly  supervise  contract  work  and  to  protect 
itself  from  making  unreasonably  bad  bargains. 
Such  an  admission  gives  away  the  whole  case  for 
governmental  enterprise.  It  is  futile  to  think  that 
it  can  escape  the  penalty  of  its  inherent  defect  by 
assuming  a  kind  of  commercial  monasticism  ;  that 
it  can  cultivate  a  cloistered  municipal  virtue  by 
avoiding  contact  with  the  much-maligned  contractor. 

All  the  considerations  we  have  been  discussing 
do  not,  it  is  true,  apply  to  the  circumstances  under 
which  the  London  County  Council  Works  Depart- 
ment was  set  on  foot.  The  spirit  which  animated 
London's  Central  Authority  in  1892  is  indicated 
by  the  election  address  of  Mr.  John  Burns,  who 
pledged  himself  ''  to  direct  employment  of  all  labour 

220 


Municipal   Works   Departments 

by  the  Council,"  which  was  to  have  its  power  en- 
larged so  as  to  enable  it  ''  to  undertake  the  organisa- 
tion of  industry  and  distribution,  especially  of  those 
departments  dealing  with  the  necessaries  of  life." 
London's  Works  Department,  in  fact,  was  only  a 
preliminary  step  towards  general  Socialism. 

In  May,  1892,  on  the  motion  of  Mr.  John  Burns, 
the  Council  adopted  this  resolution  :  "  That  all 
contractors  be  compelled  to  sign  a  declaration 
that  they  pay  the  trades  union  rate  of  wages  and 
observe  the  hours  of  labour  and  conditions  re- 
cognised by  the  trade  unions  in  the  place  or  places 
where  the  contract  is  executed," 

The  literal  interpretation  of  this  resolution  was 
that  the  trade  unions  concerned  should  fix  the 
rates  of  wages,  hours  of  labour  and  conditions,  and 
that  the  contractors  should  conform  to  them.  The 
labour  clauses  subsequently  incorporated  in  the  form 
of  contract  adopted  by  the  Council  were  so  one-sided, 
that  the  principal  contracting  firms  in  London  and 
the  country  would  not  subn.ii:  any  tenders.  The  few 
venturesome  contractors  who  did  tender,  naturally 
made  special  provision  for  the  risk  of  increased 
wages,  &c.,  as,  owing  to  the  Council's  action,  they 
were  practically  at  the  mercy  of  the  trades  unions. 
In  consequence,  certain  tenders  in  connection  with 
the  erection  of  a  school  house  and  the  construction 
of  a  sewer  were  found  to  exceed  the  estimates  of  the 
Council's  architect  and  the  engineer.  Thereupon,  in 
the  spring  of  1893,  a  Works  Committee  was  consti- 
tuted to  execute  works  for  the  Council,  but  not  by 
any  means  in  precisely  the  same  manner  as  a  con- 
tractor.     As    the    late    Lord    Farrer    (ex- Permanent 

221 


Socialism  in  Local  Government 

Secretary  of  the  Board  of  Trade),  who  was  then  a 
member  of  the  Council,  pointed  out  in  a  memorandum 
upon  the  question,  the  Council  was  by  its  own  action 
"committed  to  the  policy  of  doing  its  own  work" 
.  .  .  and  "  it  has  been  driven  into  this  course,  not 
only  by  a  priori  considerations  of  expediency  or  by 
Socialist  theories  of  municipal  action,  but  by  its  own 
previous  dealings  with  contractors'  wages,  which  had 
made  it  impossible  for  contractors  to  tender  except 
at  an  exorbitant  price." 

Confident  that  the  time  was  not  far  distant  when 
all  its  work  would  be  done  by  the  new  Works  De- 
partment, the  Council  established  a  large  central 
depot  and  workshops,  and  entrusted  the  supervision 
to  a  Committee  of  twenty-three  amateurs,  who  de- 
manded as  much  work  as  possible  from  the  Council 
at  a  time  when,  according  to  the  Comptroller  of  the 
Council,  neither  the  establishment,  the  premises,  nor 
the  organisation  were  ready  to  cope  with  it.  They 
were,  in  fact,  eager  to  become  gigantic  employers 
of  labour,  and  to  realise  the  prophecy  of  Mr.  Sidney 
Webb,  that  '<  the  collective  organisation  of  cities 
would  cause  the  Heavens  of  Individualism  to  roll 
up  like  a  scroll." 

According  to  Progressive  theory,  the  superiority 
of  direct  municipal  employment  of  labour  was  to  be 
found  in — 

(i)  Abetter  class  of  work  than  that  done  by  the 
contractors. 

(2)  Higher  pay  and  shorter  hours  of  labour  for 
workmen. 

(3)  A  saving  of  the  contractors'  profit,  which  was 
assumed  to  be  10  per  cent. 

222 


Municipal  Works  Departments 

We  may  pass  lightly  over  the  early  failures  of  the 
Department.  Three  years'  experience  failed  to  pro- 
duce the  anticipated  results,  though  Mr.  John  Burns 
described  the  state  of  things  as  "  the  beginning  of 
greater  success  in  the  municipal  Socialism  the  Council 
has  done  so  much  to  justify  and  realise."  This 
optimistic  view  was  not  shared  by  the  Progressive 
leader,  Mr.  W.  H.  Dickinson,  who  could  only  hope 
that  "  as  the  organisation  perfected,  the  financial 
gain  would  be  greater." 

At  the  end  of  1896,  a  series  of  grave  irregularities 
were  brought  to  light  in  the  book-keeping  of  the 
Department.  A  Special  Committee  of  Inquiry  was 
thereupon  appointed,  with  two  expert  assessors  and 
an  accountant  and  an  architect  of  high  standing,  to 
investigate  the  whole  system  and  methods  of  manage- 
ment. The  irregularities  disclosed  consisted  of  false 
entries  in  the  accounts  for  the  purpose  of  concealing 
the  excessive  cost  of  certain  works.  Expenditure 
was  loaded  on  to  other  works,  which  being  within 
the  estimate  could  bear  the  transfer  without,  it  was 
hoped,  exciting  comment.  The  seriousness  of  the 
offence  lay  in  the  deliberate  attempt  to  deceive  the 
Council  and  the  public  as  to  the  true  results  of  the 
working  of  the  Department.  Also  this  "cooking"  of 
the  accounts  was  a  tacit  confession  of  failure. 

The  Report  of  the  Special  Committee  recommended 
various  changes  in  the  methods  of  management. 
The  Manager  was  dismissed.  By  far  the  most 
important  recommendation  in  the  Report  was  that 
the  unfair  labour  clauses  in  the  Council's  form  of 
contract  should  be  amended,  and  the  way  paved 
for  the    reintroduction  of  the   contract   system.      In 

223 


Socialism  in  Local  Government 

place  of  the  unjust  stipulation  that  the  contractors 
should  pay  the  rate  of  wages,  and  observe  the  hours 
of  labour  fixed  by  the  trade  unions  alone,  it  was 
resolved  that  the  basis  in  future  should  be  the  rates 
of  wages  and  conditions  of  labour  agreed  upon  be- 
tween associations  of  employers  and  trade  unions 
and  in  practice  obtained.  By  this  means  the  just 
grievance  of  the  contractors  was  removed. 

The  first  main  aim  of  the  system  of  direct  em- 
ployment of  labour  was  to  secure  better  work  than 
could  be  done  by  the  contractors.  The  conclusion 
of  the  expert,  Mr  Gruning,  who  was  called  in  by 
the  Council  at  the  special  inquiry  of  1896  into  the 
management  of  the  Works  Department,  was  that  : 
"  On  the  whole,  I  had  no  doubt  that  all  buildings, 
whether  executed  by  contractors  or  Works  Depart- 
ment, are  structurally  sound  and  substantially  and 
well  built."  This  statement  was  corroborated  by 
Sir  Alexander  Binnie,  the  Engineer,  and  by  Mr. 
Blashill,  the  Architect,  to  the  Council,  who  both 
stated  that  they  were  unable  to  draw  any  distinction 
as  to  quality  between  the  work  done  by  the  Works 
Department  and  contractors. 

In  regard  to  joinery,  however,  Mr.  Gruning 
severely  criticised  some  of  the  work  of  the  Depart- 
ment. 

The  fault  to  be  found  in  all  Government  depart- 
ments, viz.  slow  work,  was  not  absent  in  the  case 
of  the  Works  Department.  A  flagrant  case  occurred 
in  connection  with  the  North  Woolwich  Drainage 
System,  the  cost  of  which  exceeded  the  final  esti- 
mate by  ;^i6,7i4.    Sir  Alexander  Binnie,  the  Chief 

224 


Municipal  Works  Departments 

Engineer  of  the  Council,  said :  "  That  the  work 
was  from  the  first  very  badly  mismanaged.  ...  It 
has  taken  four  years  to  execute,  whereas  it  should 
have  been  completed  in  eighteen  months."  And  he 
also  added  :  "  I  cannot  close  this  report  witliout 
drawing  the  Committee's  attention  to  another  work 
now  under  construction,  which,  unless  some  im- 
provement be  made,  will,  I  fear,  result  in  the  same 
unfortunate  manner.  I  allude  to  the  tunnel  under 
the  Lee,  in  connection  with  the  Hackney  Wick 
sewer.  This  tunnelling  was  commenced  about  the 
beginning  of  February,  1901,  and  up  to  the  30th 
November  last,  or  in  a  period  of  ten  months,  about 
681  feet  in  length  of  the  iron  rings  had  been  com- 
pleted. It  is  only  necessary  for  me  to  draw  the 
Committee's  attention  to  the  rate  of  progress  under 
the  contract  for  a  larger  and  more  difficult  tunnel 
— that  at  Greenwich — the  driving  of  1200  feet  of 
which,  wholly  under  the  river  Thames,  was  finished 
in  nine  months." 

Sir  Alexander  Binnie  concluded  his  report  by 
stating  :  "  It  is  well  known  to  the  Committee  and  the 
Council  that  from  its  initiation  I  have  strongly,  and 
to  the  best  of  my  ability,  supported  the  Works  De- 
partment, and  I  am  sure  that  they  will  not  impute 
to  me  any  animus  in  the  above  remarks  ;  but  having 
been  called  upon  to  make  them,  I  feel  it  my  duty 
to  speak  plainly,  and  can  but  regret  that  this,  one 
of  the  last  reports  which  I  shall  write  while  in  the 
Council's  service,  should  have  to  be  couched  in 
such  unfavourable  terms." 

The  second  object    expected  to  be  obtained  was 

22s  p 


Socialism  in  Local  Government 

better  pay  and  conditions  of  labour  for  the  work- 
men. But  both  the  contractors  and  the  Depart- 
ment are  bound  to  pay  to  all  workmen  the  rates  of 
wages  and  to  observe  the  hours  of  labour  and  con- 
ditions agreed  between  trades  unions  and  employers. 
Thus,  again,  we  have  equality  between  the  con- 
tractors and  the  Department.  In  the  treatment  of 
employes,  one  is  not  better  than  the  other.  Indeed 
if  the  Works  Department  ventured  to  pay  a  higher 
rate  of  wages  than  that  in  practice  paid  by  the 
best  employers,  it  would  be  creating  a  privileged 
class  of  workmen,  and  there  would  be  strong 
ground  for  suspecting  the  existence  of  corrupt 
influence. 

The  principle  which  ought  to  guide  local  bodies 
in  fixing  the  wages  of  their  employes  has  thus  been 
laid  down  by  Mr.  Joseph  Chamberlain  :  "  Certainly, 
the  public,  when  it  becomes  an  employer  of  labour, 
ought  to  act  at  least  as  generously  towards  its 
workpeople  as  the  most  liberal  of  private  firms  ;  but, 
if  it  goes  one  inch  beyond  this,  it  is  entering  on 
the  dow^nward  path  which  has  conducted  so  many 
American  municipalities  to  their  ruin  ;  it  is  establish- 
ing at  the  cost  of  all  the  ratepayers,  and  of  the  great 
mass  of  the  working  people  themselves,  a  new  class 
of  privileged  workmen,  enjoying  special  advantages 
over  their  less  fortunate  fellows.  Public  employ- 
ment, little  work,  and  liberal  pay,  will  be  the  object 
of  all  who  seek  an  easy  berth  and  have  good  reason 
to  distrust  their  own  ability  to  raise  themselves  ; 
and  we  shall  be  fortunate  indeed  if  the  prizes  in  the 
gift  of  the  local  authority  are  not  sought  for  and 
bestowed  as  the    rewards    of   political    partisanship. 

226 


Municipal  Works  Departments 

Places  will  be  multiplied  to  meet  the  ever-increasing 
demand  for  them,  and  when  they  are  secured  they 
will  be  accepted  rather  as  the  satisfaction  of  past 
claims  than  as  the  opportunity  for  faithful  service 
and  honourable  industry," 

Mr.  John  Burns,  M.P.,  has  stated  that — 
''  The  London  County  Council  only  asks  con- 
tractors to  grant  their  workpeople  the  rate  of  wages, 
hours,  and  conditions  in  practice  obtained  by  the 
trade  unions  from  associations  of  employers.  The 
London  County  Council  itself  only  pays  to  its 
workpeople  what  the  same  workmen  could  get  on 
similar  work  elsewhere."  ^ 

It  is  to  be  noted  that  the  disposition  to  give  a 
minimum  of  work  for  a  maximum  of  pay  is  still 
a  common  habit  in  the  Works  Department,  and 
that  labour  troubles  are  as  much  in  evidence  under 
municipal  as  under  private  enterprise. 

We  come  now  to  the  third  and  last  argument 
advanced  for  the  institution  of  the  Works  Depart- 
ment, namely,  that  it  would  save  the  contractors' 
profit  of  10  per  cent.  Since  the  creation  of  the 
Department  in  November,  1892,  the  total  of  the 
final  estimates  and  actual  cost  to  the  period  ended 
September  30,  1907,  are  as  follows: — 

Final  Estimate.  Actual  Cost.  Alleged  Saving. 

^3,756,192  ^3,684,625  ^71,567 

Thus,  the  Department  has  not  succeeded  in 
saving  the  contractors'  profit  of  10  per  cent.     It  has, 

^  Times,  Sept.  26,  1902. 
227 


Socialism  in  Local  Government 

in  fact,  done  its  work  at  less  than  2  per  cent,  under 
"  final  estimates." 

It  is  to  be  observed  that  these  figures  afford  no 
satisfactory  comparison  with  what  would  have  been 
the  cost  if  the  work  had  been  done  by  contractors. 
The  market  has  not  been  tested.  The  Works 
Department  never  tendered  in  competition  with 
contractors  until  after  1907, — at  the  end  of  its 
career.  The  Council's  official  estimate  of  cost 
has  no  actual  relation  to  the  real  market  price 
of  the  moment.  Had  the  Works  Department  been 
placed  in  the  same  position  as  contractors,  and 
competed  with  them  for  the  Council's  work,  then 
an  equitable  comparison  would  have  been  possible. 
Taking  the  cases  since  March,  1907,  where  the 
Works  Committee  tendered  for  jobs  in  competition 
with  contractors,  we  find  that  the  contractors  were 
generally  successful  in  beating  the  Works  Depart- 
ment's tenders. 

In  one  instance,  a  complete  comparison  is 
possible  as  between  the  Works  Department  and 
the  contractors.  That  was  the  case  of  two  blocks 
of  buildings  (erected  under  the  Housing  of  the 
Working  Classes  schemes)  absolutely  identical  in 
size,  design,  and  material  used,  and  built  at  the 
same  time,  and  under  the  same  conditions  as  to 
cost  of  labour  and  material  : — 

Cost. 
Cookham  Buildings ^I4)059 

(Erected  by  contractor) 
Hogarth  Buildings     ......     ^15,030 

(Erected  by  Works  Department) 

Showing  that  instead  of  saving  the  contractors'  profit 
of    10  per  cent,   the   Works    Department    job    cost 

228 


Municipal  Works  Departments 

;^iooo  more  than  the  exactly  similar  job  done  by 
the  contractors. 

On  the  Millbank  site,  the  Culham,  Marlow,  and 
Shiplake  blocks  were  erected  by  the  contractors  at 
an  actual  cost  of  ;^3ooo  under  the  estimate  refused 
by  the  Works  Department  as  being  too  low. 

With  regard  to  the  jobbing  work  done  by  the 
Works  Department,  we  find  that  the  returns  state 
that  the  work  has  been  done  at  a  large  cost  below 
the  schedule  value.  The  jobs  are  not  done  on 
estimates,  but  on  a  schedule  of  prices.  The  alleged 
saving  is  fictitious,  because  the  schedule  of  prices 
is  much  higher  than  the  schedule  of  prices  on  which 
contractors  do  work  for  the  Government.  Of  course, 
if  the  schedule  prices  are  extravagant,  it  is  very  easy 
for  the  Works  Department  to  make  a  profit.  There 
is  no  open  competition  for  jobbing  work  ;  and  had 
the  jobs  been  given  to  contractors  on  the  same 
schedule  of  prices  as  is  paid  by  the  Government, 
the  cost  to  the  Council  would  have  been  far  less 
than  the  cost  charged  by  the  Works  Department. 

Taking  a  broad  survey  of  the  accounts,  and  apply- 
ing the  general  and  fair  tests  of  comparison  between 
the  contractors'  charges  and  the  estimates,  it  is 
beyond  dispute  that  the  third  and  chief  purpose 
of  the  Progressive  policy  has  failed.  The  "  financial 
gain  "  to  the  ratepayers  has  not  been  made. 

Progressive  apologists  seek  to  confuse  the  issue 
by  contending  that  if  the  actual  cost  of  a  work 
exceeds  the  estimate,  the  difference  is  not  loss. 
Admittedly,  it  is  not  loss  to  the  Department,  which 
is  paid  in  full  whatever  the  cost  may  be.  But  the 
difference    is   a   loss   to    the    ratepayers   when    it    is 

229 


Socialism  in  Local  Government 

considered  that  the  contractors  would  have  done 
the  work  at  or  under  the  estimated  price.  In  the 
absence  of  such  comparison,  it  would  be  impossible 
to  test  the  Department,  and  there  would  be  merely 
dead  acquiescence  in  its  extravagance. 

It  is  important  to  note  that  the  Department  was 
started  on  a  large  scale,  and  that  it  was,  therefore, 
necessary  to  keep  it  supplied  with  work.  In  that  state 
of  things  there  is  a  natural  temptation  to  a  munici- 
pality to  embark  on  unnecessary  ventures  simply  in 
order  to  maintain  its  Works  Department  in  full  work. 
It  was  estimated  in  July,  1908,  on  the  eve  of  its  aboli- 
tion, that  the  Works  Department  needed  half  a  million 
pounds'  worth  of  work  every  year,  and  that,  of  course, 
couldnotbeguaranteed  by  theLondonCounty  Council. 

Turning  to  the  experience  of  other  municipalities, 
it  was  stated  in  a  report  to  the  Leeds  Corporation 
in  1908  that  "  it  was  freely  admitted  in  Manchester 
that  the  principal  reason  for  the  increased  cost  of 
municipal  work  as  against  private  contract  was  that 
the  Corporation  workmen  had  not  done  their  simple 
duty  and  that  the  work  had  been  shirked.  ...  In 
Manchester  the  official  report  admitted  that  the  cost 
of  excavating  work  carried  out  by  the  regular  staff 
averages  156.83  per  cent,  more  than  contract  work." 
Quite  recently  the  Corporation  of  Manchester,  by 
sixty-nine  votes  to  ten  (nine  of  which  were  Socialist 
votes),  decided  that  they  would  not  set  up  a  Municipal 
Works  Department. 

Besides  London,  three  other  towns  (West  Ham, 
Sheffield,  and  Huddersfield)  have  established  Works 
Departments,  found  them  to  be  failures,  and  have 
abandoned  them. 

230 


XV 
AN   ALTERNATIVE    POLICY 

It  only  remains  to  consider  whether  any  hmits  can 
be  set  to  municipal  trading,  and  to  ascertain  what 
are  the  principles  which  ought  to  govern  the  relation- 
ship of  municipal  authorities  to  trading  functions. 
In  order  to  do  this  we  must  investigate  the  rules, 
if  any,  upon  which  local  government  is  based.  And 
when  we  proceed  to  look  for  these  rules,  we  find 
that  none  exist  ;  that  local  administration  has  been 
evolved  in  haphazard  fashion,  and  that  principle  has 
played  the  least  decisive  part  in  shaping  the  develop- 
ment of  it.  In  fact,  it  is  a  broad  patchwork  of 
expediency.  We  have,  therefore,  no  clear  indication 
as  to  the  direction  in  which  the  right  path  lies. 

Indeed,  in  the  course  of  our  researches  we  shall 
find  that  one  of  the  most  disputed  and  difficult 
questions  in  political  science  is  concerned  with  the 
duties  and  limitations  of  local  government.  If  we 
look  for  guidance  to  the  two  most  important  schools 
of  political  thought  in  the  present  day,  we  find  that 
they  are  as  wide  asunder  as  the  poles  in  their  views 
of  the  true  sphere  of  local  administration.  As  we 
are  aware,  the  Socialists  regard  it  as  the  machinery 
which  is  to  absorb  all  the  operations  of  industry  and 
private    action.     To    which    proposition    we    utterly 

231 


Socialism  in  Local   Government 

decline  to  agree.  On  the  other  hand,  the  Indi- 
viduaHsts,  an  ill-organised  and  almost  non-combative 
body,  recognising  the  blunders  and  inertia  of  Govern- 
ment departments,  believe  that  local  administration 
should  be  severely  limited  in  its  activities,  and  should 
not  venture  to  trade  even  in  the  matter  of  water 
supply. 

Now,  the  full  application  of  this  latter  principle 
is  not  to  be  easily  attained.  It  is  simple  to  cry  in 
theory,  "  Govern,  not  Trade,"  but  in  practice  the 
inviolable  rule  has  sometimes  to  be  infringed.  Never- 
theless, as  historical  evidence  shows  that  the  govern- 
mental standard  of  efficiency  is  lower  than  that 
generally  obtained  by  private  enterprise,  the  line  of 
guidance  for  us  must  be  that  the  less  Government 
undertakes  in  the  way  of  public  trading  services  the 
better  for  the  nation.  To  the  contention  of  the 
second  school  of  thought,  then,  we  can  give  a 
qualified  assent,  the  qualification  being  that  there 
may  be,  in  certain  circumstances,  and  in  an  indivi- 
dual case,  no  alternative  for  a  local  authority  but  to 
embark  upon  a  trading  venture.  Municipal  enter- 
prise may  be  forced  upon,  a  town  by  the  absence 
or  failure  of  private  effort  ;  but  even  in  such  cases 
the  municipal  intervention  need  not  of  necessity  be 
permanent.  It  ought  always  to  be  possible  to  re- 
store to  the  domain  of  private  enterprise  that  which 
has  been  withdrawn  from  it. 

If,  however,  the  matter  were  to  be  left  here,  some 
perplexing  questions  would  still  remain  unanswered. 
What,  for  instance,  is  to  be  the  character  of  the 
"  government  of  trade  "  ?  Of  what  is  the  policy  of 
municipal  control  to  consist  ?     State  more  definitely 

232 


An  Alternative  Policy 

in  fact  an  adjustment  between  the  responsibility  and 
oversight  of  the  local  authority  and  the  commercial 
activities  of  individuals,  which  will  secure  justice 
without  sacrificing  progress. 

Broadly,  to  the  first  governing  principle  that  the 
primary  function  of  local  authorities  is  to  rule  and 
not  to  trade,  the  following  may  be  added  : — 

(a)  That  local  government  should  be  equipped 
with  a  sound  set  of  laws  regulating  monopolies  of 
services  or  functions  necessary  to  the  whole  com- 
munity. 

(b)  That  when  it  has  been  proved  to  the  satis- 
faction of  an  impartial  tribunal  that  private  adminis- 
tration of  a  service  or  function  necessary  to  the 
whole  of  a  particular  community  has  failed,  then  the 
local  authority  concerned  may  itself  undertake  the 
service. 

The  first  proposition  will  probably  arouse  little 
opposition,  except  from  extreme  Individualists,  who 
not  only  resent  municipal  trading,  but  even  municipal 
regulation  of  private  trade.  The  second  proposition, 
however,  needs  some  further  explanation  in  order  to 
avoid  misapprehension.  It  must  not  be  forgotten 
that  the  undertakings  in  question  are  those  which 
(i)  supply  a  need  of  all  persons  in  the  community, 
and  (2)  possess  the  attributes  of  monopoly.  For 
example,  the  provision  of  bread  or  clothes,  though 
a  general  necessity,  is  outside  this  definition,  as  there 
is  no  monopoly  of  supply.  Again,  even  if  there 
existed  a  monopoly  of  such  an  article  as  scent,  the 
supply  of  it  ought  not  to  be  undertaken  by  a  local 
authority,  as  it  is  not  a  necessity,  or  generally  re- 
quired by  the  whole  community. 

233 


Socialism  in  Local  Government 

Of  course,  it  may  be  urged  that  even  these  prin- 
ciples do  not  cover  the  case  of  tramways  which, 
though  not  strictly  speaking  a  monopoly,  ought 
nevertheless  to  be  under  municipal  management, 
inasmuch  as  they  occupy  the  surface  of  the  public 
highway.  To  this  plea  it  is  sufficient  answer  to  ask 
what  essential  difference  does  it  make  to  the  people 
whether  the  highway  is  so  used  by  the  town  or  by 
a  private  company  ?  The  latter  is  not  a  greater 
nuisance  than  the  former.  And  under  a  strict 
franchise  a  road  rental  would  be  paid  by  the  com- 
pany for  the  privilege,  and  their  use  of  the  road 
would  be  limited  and  regulated. 

A  second  exception,  which  it  is  urged  must  be 
made  to  the  principles  mentioned,  is  that  of  water 
supply.  And  no  doubt,  on  grounds  of  public  health, 
a  strong  case  can  be  made  out  for  municipalisation 
— a  case,  indeed,  which  cannot  be  fairly  refuted. 
Water  supply  is  a  fixed,  natural  monopoly,  never 
likely  to  be  superseded,  and  incapable  of  any  vast 
improvement  in  its  mode  of  service.  Water  is  not  a 
manufactured  article  like  gas  or  electricity  ;  it  is  a 
natural  commodity. 

What  is  the  kind  of  government,  or  regulation,  or 
control  which  has  been  exercised  in  the  past  over 
trading  ventures  of  a  semi-monopoly  or  monopoly 
character  ?  Has  that  control  been  efficient  or  in- 
efficient ?  Has  there  been  any  complete  system  of 
control  established  by  law  ? 

Reviewing  the  wide  expanse  of  ground  over  which 
we  have  travelled  in  previous  chapters,  we  find  a 
remarkable  lack   of    any   real    effort    to    establish   a 

234 


An  Alternative  Policy 

definite  policy  that  avoids  the  evils  of  unrestricted 
private  enterprise  and  municipal  trading.  It  is  true 
that  piecemeal  legislation  on  the  subject  has  been 
passed,  but  the  measures  taken  have  been  ineffective 
and  ill-designed.  There  has  been,  in  fact,  no  attempt 
to  settle  a  full  scheme  of  State  regulation  of  large 
services  of  a  monopoly  character.  This  may  be  due 
to  the  failure  of  Parliament  to  adequately  investigate 
the  matter.  Again,  though  advocates  of  municipal 
trading  persistently  allege  that  the  bad  service  and 
high  prices  of  companies  were  dominating  factors 
which  led  to  municipalisation,  the  evidence  goes  to 
show  that  such  was  not  by  any  means  the  case.  And 
in  the  few  cases  where  an  inadequate  service  was 
given,  it  was  chiefly  due  to  the  unwise  restrictions 
placed  upon  private  effort  by  the  legislature,  and  to 
the  opposition  of  local  authorities.  For  example,  the 
gas  undertakings,  as  a  rule,  were  efficient,  but  the 
prospect  of  securing  the  profits  for  the  ratepayers 
led  to  municipal  purchase  and  working.  Birmingham 
and  Leicester  are  instances  of  this  policy.  As  we 
have  seen,  the  foolish  Tramways  and  Electric  Light- 
ing Acts  of  1870,  1882,  and  1888  were  responsible 
for  hampering  the  development  of  transit  and  electric 
services. 

The  regulations  relating  to  gas  companies  are, 
perhaps,  the  nearest  approach  in  this  country  to  a 
perfect  system  of  public  control  as  opposed  to  public 
ownership  and  working. 

The  private  gas  companies  are  subjected  to  ad- 
ministrative rules  in  matters  of  audit  and  the  supply 
and  quality  of  the  gas,  limitation  of  dividends,  and 
amount  of  capital  ;  and  these  regulations  are  designed 

235 


Socialism  in  Local  Government 

with  a  view  to  the  automatic  relationship  of  dividends 
and  prices.  Under  the  Gas  Works  Clauses  Act, 
1847,  ^^^  profits  of  a  gas  company  are  not  to  ex- 
ceed 10  per  cent,  on  the  paid-up  capital,  but  back 
dividends  of  a  lesser  rate  may  be  made  up.  If  the 
clear  profits  amount  to  more  than  10  per  cent.,  after 
allowing  for  back  dividends,  then  the  balance  is  to 
be  set  aside  to  form  a  reserve  fund  not  exceeding  a 
tenth  of  the  nominal  capital.  The  dividend  allowed 
on  new  capital  is  usually  limited  to  7  per  cent,  on 
ordinary  and  5  per  cent,  on  preference  shares. 

These  provisions  as  to  dividend,  however,  are  not 
applicable  to  gas  companies  who  have  adopted  the 
sliding  scale  of  prices  and  dividends  which  was  first 
applied  in  the  Commercial  Gas  Act  of  1875,  and  is 
now  in  general  use.  "  The  theory  of  the  sliding 
scale  is  to  give  to  the  consumer  a  pecuniary  interest 
in  the  economy  and  skill  of  the  gas  company  ;  so 
that  if,  by  these  means,  the  company  are  enabled  to 
make  and  supply  gas  at  a  lower  cost,  they  shall  on 
the  one  hand  make  a  reduction  in  the  price  of  gas 
to  the  consumer,  and  on  the  other  hand  be  able  to 
pay  their  shareholders  a  proportionate  increase  in 
the  otherwise  authorised  rate  of  dividend  ;  and  again, 
if  they  shall  make  any  increase  in  the  standard  price, 
they  shall  make  a  proportionate  decrease  in  the 
standard  rate  of  dividend."  -^ 

To  control  the  raising  of  additional  capital  a  Bill 
must  be  promoted  in  Parliament,  and  generally  what 
is  termed  the  "  auction  clause "  is  inserted  in  it. 
That  is  to  say,  new  capital  is  sold  by  auction,  and 
"so  much  money  as  is  obtained  by  way  of  premium 

^  Michael  and  Will  on  7'ke  Law  relating  to  Gas  and  Water,  p.  civ. 

236 


An  Alternative  Policy 

on  the  nominal  or  face  value  of  the  new  shares " 
is  added  to  the  capital  of  the  company,  but  bears 
no  dividend.  It  thus  helps  to  increase  the  profits 
divisible  on  the  dividend-bearing  capital,  and  at  the 
same  time  operates  to  lower  the  price  of  gas  to  the 
consumer. 

Regarded  as  a  whole,  these  regulations  form  a 
fairly  comprehensive  and  just  system  of  control, 
which  protects  all  parties.  Nevertheless,  it  is  true 
that  the  Gas  Acts  are  capable  of  improvement. 

Having  examined  the  general  conditions  under 
which  the  gas  companies  work  in  this  country,  we 
may  with  advantage  choose  the  examples  of  France 
and  Germany  as  affording  the  most  effective  illustra- 
tions of  a  wise  and  sound  policy  of  municipal  control 
as  opposed  to  direct  municipal  trading. 

Strangely  enough,  the  principle  of  municipal 
ownership  and  management  of  trading  concerns 
has  made  little  advance  in  France,  though  we  might 
have  expected  to  find  Municipal  Socialism  more  fully 
developed  there  than  in  any  other  country.  The 
four  services  generally  undertaken  by  local  autho- 
rities are  markets,  slaughter-houses,  theatres,  and 
funerals.  The  three  last-named  services  are  peculiar 
duties  for  a  municipality  to  undertake.  Water  supply, 
however,  is  being  gradually  withdrawn  from  the 
sphere  of  private  enterprise.  There  are  only  a  few 
towns  carrying  on  gas  and  electricity  undertakings. 

Generally,  the  policy  of  the  Government  is  opposed 
to  municipal  operation  of  large  services  like  tram- 
ways, local  railways,  gas  and  electricity  works.  The 
principle  adopted  is   to   combine   private   enterprise 

237 


Socialism  in  Local  Government 

with  an  effective  municipal  control.  Therefore,  the 
monopoly  concerns  in  question  are  made  the  subject 
of  concessions  to  private  companies  or  individuals 
granted  by  the  State,  the  Department,  or  the  Com- 
mune. In  cases  where  the  power  of  concession  is 
in  the  hands  of  the  State  and  involves  the  use  of  the 
public  highway,  the  State  makes  the  concession  to 
the  local  authority  concerned,  which  transfers  the 
grant  to  the  private  company  or  individual  seeking 
it.  Strict  conditions,  however,  are  usually  laid  down 
for  the  payment  to  the  local  authority  of  a  percentage 
of  the  gross  income  of  the  undertaking,  and  other 
matters  are  also  regulated.  A  like  power  of  imposing 
conditions  also  exists  in  cases  where  the  grant  and 
the  concession  rests  in  the  discretion  of  the  local 
body  alone.  It  is  important  to  note  that  the  period 
for  which  franchises  are  granted  is  very  long  com- 
pared with  the  terms  under  the  British  Tramway 
and  Electricity  Acts.  Private  companies,  too,  which 
use  the  public  roads  pay  royalties.  These  charges, 
in  the  case  of  electricity  supply,  have  been  fixed  by 
the  Government  at  varying  rates  dependent  upon  the 
character  of  the  place  where  the  works  are  situate. 
In  addition  to  these  charges,  the  cost  of  adminis- 
trative control  is  also  defrayed  by  the  companies. 

The  kind  of  governmental  control  exercised  in 
France  over  private  monopoly  concerns  is  exemplified 
by  the  case  of  the  charter  granted  to  the  Paris  Gas 
Company  in  1870.  The  company  under  that  charter 
was  bound  to  supply  gas  wherever  the  public  autho- 
rities determined.  The  inspection  of  the  making  and 
testing  of  gas  ;  the  supervision  of  gas  fittings  ;  and 
the  management   of   street   and  public  lighting  was 

238 


An  Alternative  Policy 

discharged  by  a  department  of  public  works.  In 
fact,  "  every  detail  of  the  service  is  brought  under 
strict  regulation,  and  there  is  the  least  possible 
ground  for  complaint  against  the  gas  company  as  a 
private  monopoly."  -^ 

From  the  financial  point  of  view  the  arrangements 
were  admirable.  A  maximum  price  for  gas  was 
fixed  ;  the  supply  of  gas  for  public  purposes  was 
at  cost  price.  The  rental  paid  to  the  city  was  over 
-^8000  per  annum,  in  addition  to  a  tax  of  two  francs 
per  hundred  cubic  metres  of  gas  supplied.  The 
company  could  not  "  water "  its  capital,  and  its 
dividend  was  limited,  any  further  profits  being 
divided  between  the  shareholders  and  the  munici- 
pality. At  the  end  of  the  franchise  (1905)  all  rights 
reverted  to  the  city,  as  well  as  the  subways,  piping, 
&c.,  in  connection  with  the  plant. 

After  the  expiry  of  the  franchise  a  new  arrange- 
ment was  made.  According  to  M.  Gaston  Cadoux,'^ 
the  new  regime,  which  came  into  force  on  September 
I,  1907,  entrusts  the  works  and  sheds  and  mains  to 
the  management  of  a  new  company,  which  makes 
and  distributes  the  gas,  and  collects  the  money  from 
subscribers  and  that  realised  by  the  sale  of  by- 
products by  right  of  interested  management.  That 
is  to  say,  the  whole  plant  is  the  property  of  the  city, 
as  a  matter  of  concession,  through  the  payment  of 
90  million  francs  to  the  Compagnie  Parisienne. 
That  sum  represented  half  the  assets  of  establish- 
ment, apart  from  the  system  of  pipes,  &c.,  in  the 
public    highways ;     this    half    was    returned    to    the 

1  Shaw,  Municipal  Governt?!e7!t  in  Europe,  p.  50. 
^  La  Vie  des  Grandes  Capitales. 

239 


Socialism  in  Local  Government 

shareholders  of  the  company,  and  the  other  half  to 
the  city  under  the  concession.  As  to  the  canalisa- 
tion, valued  at  40  to  45  million  francs,  a  return  was 
made  gratuitously  to  the  city  by  way  of  contract. 
The  new  company  manage  the  whole  undertaking, 
interest  of  4  or  5  per  cent,  on  its  capital  (30  million 
francs)  being  guaranteed,  according  to  the  profits 
which  the  city  will  derive  therefrom.  The  whole  of 
the  profits,  after  allowing  for  this  4  or  5  per  cent, 
interest,  go  to  the  city. 

For  some  years  the  city  of  Paris  received  on  an 
average  about  ^800,000  per  annum  under  the  late 
franchise,  as  well  as  the  advantage  of  gas  at  cost 
price  for  public  lighting.  Then  the  competition  of 
electricity,  and  the  cheapness  of  oil,  caused  reduc- 
tions in  the  price  of  gas,  and  naturally  produced  less 
revenue  to  the  municipality.  In  1905,  the  Com- 
pagnie  Parisienne  handed  over  as  the  share  of  the  city 
in  the  profits,  a  sum  of  17,098,102  francs  ;  and  also 
paid  6,883,157  francs  for  octroi  duty.  The  total 
revenue  thus  derived  by  the  city  from  the  gas  under- 
taking was  nearly  ^969,000.  Upon  the  whole,  the 
city  of  Paris  has  reaped  enormous  benefits  from 
this  system  of  public  control,  and  at  the  same  time 
has  not  run  the  risks  of  loss  or  supersession. 

With  regard  to  electricity,  the  municipality,  at  the 
outset,  established  an  experimental  central  electrical 
installation  in  the  great  central  market  with  the 
object  of  ascertaining  cost  of  production,  &c.  Paris 
was  divided  into  seven  sections,  and  exclusive  rights 
of  electric  supply  were  granted  for  a  short  period 
to  a  company  in  each  section.  Full  provision 
was   made   to    ensure   an    immediate    and    complete 

240 


An  Alternative  Policy 

supply  in  each  district.  Street  lighting  was  to  be 
provided  at  about  cost  price,  and  maximum  charges 
to  consumers  fixed. 

The  concessions  of  the  electric  light  companies 
all  expired  about  1908.  From  April  9,  1907,  the 
city  became  the  proprietor  of  all  the  cables  in  the 
public  streets  (the  canalisation).  New  arrangements 
came  into  force  on  April  i,  1908.  The  city  has 
granted  a  monopoly  of  the  electric  lighting  to  two 
new  groups,  letting  to  them  the  works  which  have 
become  the  property  of  the  city. 

The  omnibus  system  in  Paris  is  also  the  subject 
of  a  franchise  by  which  profits  are  shared  with  the 
city.  The  Omnibus  Company  also  runs  nine  lines 
of  tramways. 

The  development  of  the  policy  of  municipal 
regulation  and  control  in  Germany  is  interesting. 
Taking  the  city  of  Berlin  as  a  typical  example,  we 
find  that  the  revised  electric  light  franchise  granted 
to  the  Berlin  Electric  Works  Company  in  1888  is 
similar  in  character  to  that  of  the  Parisian  companies. 
The  charge  for  permission  to  use  the  streets  is  10 
per  cent,  of  the  gross  receipts  of  the  company.  If 
a  net  profit  of  more  than  6  per  cent,  is  earned  by 
the  company,  the  city  of  Berlin  is  entitled  to  25 
per  cent,  of  the  excess.  A  nominal  charge  only  is 
made  for  street  lighting.  A  list  of  charges  to  con- 
sumers is  fixed  by  the  city  authorities,  who  have 
full  powers  of  inspection  ;  and  the  right  to  purchase 
the  undertaking  upon  a  fair  basis  at  any  time  after 
1895  is  reserved.  In  March,  1899,  the  franchise  was 
extended.      The   new  agreement,   besides  stipulating 

241  Q 


Socialism  in  Local  Government 

that  10  per  cent,  of  its  gross  proceeds  should  be 
paid  to  the  city,  provided  that  if  the  clear  profit 
exceeds  6  per  cent,  of  the  joint  stock  up  to  twenty 
million  marks,  the  company  must  pay  50  per  cent, 
of  the  clear  profit  ;  should  the  joint  stock  be  aug- 
mented beyond  that  sum,  50  per  cent,  must  be 
paid  of  the  clear  profit  that  exceeds  4  per  cent,  of 
the  capital.  No  exclusive  right  of  supply  is  given. 
Prices  are  agreed  with  the  Town  Board.  Great 
financial  advantages  to  the  city  of  Berlin  have 
resulted  from  this  arrangement.  According  to  the 
Berlin  Budget  for  1908,  the  sum  paid  to  the  city  by 
the  company  is  5,160,000  marks,  or  over  ^250,000. 

The  gas  lighting  of  Berlin  is  managed  by  an 
English  company  under  a  franchise  from  the  city. 
The  franchise  was  to  expire  in  1904,  but  in  1901 
the  company  received  an  extension  of  their  franchise 
for  twenty-seven  years.  The  company  supply  gas 
for  public  lighting  free  of  charge. 

Municipal  housing  has,  so  far,  made  little  progress 
in  Prussia.  The  local  authorities  have  confined  their 
operations  to  providing  for  municipal  employes,  and 
to  advancing  money  at  low  rates  of  interest  to 
private  persons  or  companies  who  undertake  to 
build  working-class  dwellings  at  moderate  rentals.^ 

Turning  to  the  tramways  of  Berlin,  the  franchise 
granted  to  the  Great  Berlin  Tramway  Company  re- 
sulted in  an  ''  admirably  complete  and  satisfactory 
service  of  horse  cars  that  permeated  the  whole  city." 
The  company  paid  large  sums  for  the  privileges  of 
the  service,  undertook  onerous  duties  as  regards 
paving  and  cleansing  streets  where  its  lines  are  laid, 

^  Prof.  Ashley  on  Local  and  Central  Government,  p.  l6i. 

242 


An  Alternative  Policy 

and  paid  an  annual  sum  to  the  city  based  on  earnings. 
The  sum  paid  annually  in  relief  of  rates  was  about  a 
million  marks  in  the  early  nineties.  Various  re- 
visions of  the  franchise  have  since  been  made,  the 
most  notable  being  those  of  1897  and  1900,  by 
which  electric  tramways  were  established.  If  at 
any  time,  during  the  existence  of  the  franchise,  the 
city  of  Berlin  requires  extensions  which  are  not 
stated  in  the  franchise,  the  company  must  build 
nearly  one  hundred  miles  of  lines,  double  track  being 
regarded  as  single.  The  municipality,  however,  pays 
one-third  of  the  cost  of  construction  of  such  lines  as 
are  required  to  be  built  between  1902  and  1907, 
and  one-half  of  the  cost  of  all  lines  ordered  between 
1908  and  19 1 4.  After  the  latter  date,  the  munici- 
pality pays  the  entire  cost  of  construction,  or  an 
allowance  towards  the  cost  of  operation.  The 
franchise  also  deals  with  the  introduction  of  any 
new  and  improved  methods  of  locomotion,  and  the 
application  of  it  to  the  system.  Waiting-rooms  at 
the  various  termini  and  intermediate  stations,  warmed 
in  winter,  must  be  established  at  the  request  of  the 
city.  No  less  than  8  per  cent,  of  the  gross 
earnings  is  paid  to  the  city.  If  in  any  year  the 
net  proceeds  exceed  those  of  the  year  in  which  the 
franchise  was  granted,  the  companies  must  pay  one 
half  of  such  surplus  to  the  city.  On  any  new 
capital  invested  6  per  cent,  of  the  profits  must  be 
paid  to  the  municipality.  The  fares  may  be  regulated 
by  the  city,  and  a  maximum  fare  is  fixed.  The 
company  may  not  charge  more  than  ih  cents 
within  the  city  limits,  nor  outside  of  these  to  the 
end  of  every  line  in  twenty  stated  suburbs.     Scholars' 

243 


Socialism  in  Local  Government 

and  workmen's  tickets  are  issued  at  reduced  rates. 
The  franchise,  which  expires  in  19 19,  also  provides 
for  pensions  to  employes.  The  city  of  Berlin  will 
receive  for  1907  no  less  than  ^156,000  as  a  result 
of  the  franchise.^ 

It  is  true  that  in  a  few  cases  German  cities  have 
taken  over  the  tram  lines  from  the  companies  and 
adopted  municipal  working  on  the  ground  that  the 
companies  have  been  unprogressive.  But,  as  Pro- 
fessor L.  S.  Rowe  has  pointed  out,  "  this  has  been 
due,  in  part  at  least,  to  the  onerous  conditions  under 
which  the  original  franchise  grants  were  made.  The 
companies  did  not  feel  justified  in  incurring  the  risks 
involved  in  making  improvements  on  a  large  scale  or 
in  extending  the  service  into  the  outlying  districts 
of  the  city.  Impressed  with  the  lessons  of  this  ex- 
perience we  find  the  more  recent  franchise  grants 
specifying  minutely  the  streets  over  which  the  service 
must  be  extended."  ^ 

These  recent  German  franchises  may  well  be 
taken  as  a  model  for  the  system  of  municipal  con- 
trol, which  is  a  more  excellent  way  than  municipal 
trading.  "  In  studying  these  German  contracts,"  says 
Mr.  Albert  Shaw,  "  one  is  always  impressed  with  a 
sense  of  the  first  class  legal,  financial,  and  tech- 
nical ability  that  the  city  is  able  to  command."  ,  .  . 
"  The  arrangement  in  all  its  details  is  an  elaborate 
one,  but  it  is  the  perfection  of  business  lucidity 
and  intelligence."  ^  Surely,  not  less  than  Germany, 
our    local   government    possesses    enough   character, 

1  Berlin  Budget  for  1908. 

'^  Municipal  Ozvnership  and  Managefuent  of  Street  Railways  in  Germany. 
3  Municipal  Government  in  Continental  Europe,  p.  350. 

244 


An  Alternative  Policy 

intelligence,    and     stability     to     frame     a     franchise 
securing  fair  play  all  round  ? 

In  conclusion,  it  would  be  advantageous  to 
establish  a  Department  of  the  Local  Government 
Board  for  the  special  purpose  of  investigating  any 
general  complaint  on  the  part  of  a  local  authority 
against  a  private  monopoly,  and  to  enforce  the 
regulations  and  penalties  where  necessary.  Such  a 
Department  should  also  examine  and  report  upon 
any  proposal  for  municipalisation  where  private 
enterprise  has  failed,  and  such  report  should  be 
circulated  to  the  ratepayers  and  a  vote  taken  on  the 
proposal. 


245 


XVI 
SOCIALISM    IN   EDUCATION 

The  position  of  children  in  the  SociaHst  State  is 
somewhat  indefinite.  All  the  brief,  unadorned  state- 
ments of  the  case  for  Socialism  seem  to  disagree  on 
this  point.  We  are  told  that  "  the  children  will 
belong  more  to  the  State  than  to  the  parents  "  ;  ^  that 
the  "  teaching  of  very  young  children  will  probably 
become  a  feminine  monopoly  in  a  Socialist  State. 
.  .  .  The  Socialist  mothers  will  take  charge  of  the 
very  early  years.  After,  say,  six  or  seven  years 
have  passed,  the  children  will  go  into  the  Elementary 
Schools,  where  they  will  be  fed,  taught  to  work  and 
play,  drill  and  dance,  sing  and  sleep,  and  live  their 
happy  lives  under  the  kind  eyes  of  sympathetic 
women,  the  State's  kindly  teachers,  who  will  co- 
operate with  the  parents  in  trying  to  develop  in  the 
little  ones  all  the  perfections  of  character  of  which 
they  may  be  capable."  ^  On  the  other  hand,  another 
Socialist  leader  defines  the  first  care  of  Socialism  to 
be  to  "  protect  what  remains  of  the  family,  and  re- 
build what  has  fallen  down,"  by  "  a  more  ample 
co-operation  between  the  State  as  a  health  autho- 
rity and  the  home."^     He  objects  to  State  mothers. 

^  The  Woman  Socialist,  p.  62.  "  Ibid.,  p.  88. 

*  J.  R.  Macdonald,  M.P.,  Socialism,  p.  97. 
246 


Socialism  in   Education 

*'  The  barrack-room  and  the  State  nursery  .  .  ,  are 
condemned  by  up-to-date  psychologists.  The  per- 
sonal touch  and  affection  of  the  mother,  the  sur- 
roundings and  ethics  of  a  small  community,  the  sense 
of  continuity  which  comes  to  the  maturing  child's 
mind  from  a  personal  organisation  like  the  family, 
are  all  invaluable  to  a  State." 

If  the  first  plan  is  adopted,  it  is  easy  to  see  that 
the  home  life  of  the  child  and  maternal  care  of  it 
will  be  a  petty  trifle  compared  to  the  power  exer- 
cised by  the  State.  This  supersession  of  the  mother 
is  naturally  most  repugnant  to  the  women  of  to-day, 
and  any  undue  advertisement  of  this  part  of  the 
Socialist  creed  would  effectually  block  the  progress 
of  Socialism.  Therefore,  the  second  presentment  of 
the  child's  position  under  Socialism  is  an  attempt  to 
water  down  the  State-mother  aspect.  The  emphasis 
is  laid  upon  the  need  of  home  life,  "  the  personal 
touch  and  affection  of  the  mother."  Nevertheless, 
there  is  to  be  "  a  more  ample  co-operation  "  between 
the  State  and  the  home. 

Before  we  proceed  to  consider  how  much  has 
been  accomplished  toward  the  realisation  of  the 
Socialist  ideal,  let  us  take  a  backward  glance  at  the 
stages  by  which  State  education  has  advanced.  Far 
more  than  a  century  passed  after  Diderot  advocated 
free  compulsory  education,  and  free  meals  for  school 
children,  when  the  first  part  of  his  scheme  was 
carried  into  practice  in  this  country  with  many 
misgivings  in  the  minds  of  those  who  feared  that 
the  scheme  was  but  the  prelude  to  many  serious 
onslaughts  upon  parental  responsibilty.  Thirteen 
years  later,  in  1904,  an  Act  was  passed  empowering 

247 


Socialism  in  Local  Government 

each  Education  Committee  ''to  provide  anything 
and  everything  that  it  deems  necessary  in  the 
way  of  education — physical,  mental,  moral,  elemen- 
tary, secondary,  university,  manual,  literary,  artistic, 
scientific,  commercial,  technological,  or  professional, 
without  restriction  of  subject  or  kind  or  grade,  with- 
out limit  of  amount  or  cost  ;  and  without  distinction 
of  class  or  race,  or  creed  or  sex  or  age."  ^  The  duty 
was  thus  laid  upon  the  Education  Authorities  of 
bringing  our  educational  system  up  to  the  highest 
practical  point  of  efficiency,  so  as  to  secure  "  the 
harmonious  and  equable  evolution  of  the  human 
powers."  With  this  aim  no  one  will  find  fault,  and, 
apart  from  the  question  we  are  considering,  and  the 
bitter  religious  controversy  which  has  been  and  still 
is  a  stumbling-block  in  the  path  of  progress,  there 
has  been  loyal  co-operation  in  the  stupendous  task 
presented  by  the  endeavour  to  attain  it. 

A  grave  difference  of  opinion,  however,  has  arisen 
with  regard  to  what  may  be  termed  auxiliary  ques- 
tions. The  Administrative  Socialist  has  succeeded 
in  making  a  large  advance  towards  achieving  the 
ideal  of  ''State  children"  by  securing  the  assent  of 
Parliament  to,  first,  the  feeding,  and  secondly,  the 
medical  inspection  of  school  children.  So  steadily 
and  doggedly  has  the  Socialist  movement  in  Educa- 
tion gone  forward  that  a  general  conviction  reigns 
that  this  stream  of  tendency  can  neither  be  turned 
back  nor  permanently  checked. 

The  process  by  which  State  responsibility  has  been 
substituted  for  the  duties  of  parents  has  been  by  way 
of  voluntary  and  charitable  effort.      It  is  safe  to  say 

^  S.  Webb,  London  Education,  p.  3, 
248 


Socialism  in  Education 

that  the  organisers  of  it  never  contemplated  such  an 
outcome  to  their  work.  In  the  PubHc  Elementary 
Schools  of  some  towns  there  had  existed  for  many 
years  numerous  charitable  agencies  for  the  purpose 
of  feeding  poor  school  children.  Founded  upon 
purely  charitable  grounds,  there  was  no  thought  of 
Socialism.  Nevertheless,  with  a  supreme  eye  to 
successful  propaganda,  the  Socialist  soon  proceeded 
to  utilise  the  situation  by  demanding  that  the  State 
should  feed  necessitous  children.  In  Bradford,  for 
instance,  the  Labour  Party  placed  that  plan  in  the 
forefront  of  their  municipal  policy.  After  a  vigorous 
but  vain  attempt  had  been  made  by  the  Socialists  in 
the  City  Council  to  secure  the  use  of  the  rates  for 
feeding  children,  the  following  resolution  was  adopted 
in  December,  1904: — 

"  I.  That  it  is  the  duty  of  the  community  to  see  that 
all  children  are  sufficiently  fed. 

2.  That    the    first    responsibility    of    feeding    the 

children  rests  with  their  parents  and  not  with 
the  ratepayers. 

3.  That  voluntary  effort  is  fully  able  and  willing 

to  feed  children  who  are  temporarily  neces- 
sitous by  no  fault  of  their  parents. 

4.  That  where  the  children  of  neglectful  parents  are 

not  sufficiently  fed,  the  duty  of  feeding  them 
belongs  to  the  Board  of  Guardians,  who  have 
power  in  proper  cases  (a)  to  recover  the  costs 
from  their  parents,  [b)  to  prosecute  neglectful 
parents,  (c)  in  co-operation  with  the  police  to 
remove  the  children  from  the  custody  of  their 
parents  and  to  place  them  in  suitable  homes. 

5.  That    it    is    desirable     that     the     question     of 

249 


Socialism  in  Local  Government 

providing  meals  at  a  small  fixed  charge  cover- 
ing the  cost  only  for  children  attending  the 
Elementary  Schools  should  be  considered. 
6.  That,  following  these  considerations,  the  resolu- 
tion   regarding    the    feeding    of    necessitous 
children,  passed  at  the  City  Council  meeting 
on    November    29th,    be    rescinded    for    the 
purpose  of  adopting  a  procedure  in  accord- 
ance with  the  above  resolutions." 
The  Poor  Law  Guardians  proceeded  to  deal  with 
neglectful  parents  by  notices,  and,  in  some  cases,  by 
prosecution  in  the  County  Court.    By  this  means  the 
number  of  underfed  children  was  diminished,  and  the 
parents  brought  to  a  sense  of  their  duty.     A  volun- 
tary fund  provided  for  a  large  number  of  the  really 
necessitous  children,  and  the  remainder  were  fed  by 
the   Guardians    at   the    expense    of   the   rates.      The 
policy  thus  adopted  promised  to  be  successful.     It 
was  tried  for  only  one  year,  being  superseded  by  the 
Act    for    feeding    children.       Indeed,    Bradford    has 
been  taken  as  the  best  example  that  can  be  given  of 
a  large  town  in  which  this  voluntary  work  "  has  been 
carefully    and   efficiently  organised."^      In    1905,    a 
Committee  representing  the  Education  Authority  and 
the  various  philanthropic  societies  was  administering 
the  funds  contributed  by  the  charitable  public.      In 
the  first  six  months  of   1905,  no  less  than   235,222 
meals  had  been  provided  at  a  cost  of  ;!^i569.     These 
meals  were  mainly  given  in  the  shape  of  dinners,  and 
no  charge  was   made  to  the  parents.      The   largest 
number  of  children  on  the  feeding  list  is  stated  as 

^  hiter- Departmental  Coinniittee  on  Medical  Inspection  and  Feeding  of 
School  Children f  IQOS- 

250 


Socialism  in  Education 

2500  out  of  a  total  number  of  55,000  children  on 
the  school  books.  The  provision  of  meals  was  con- 
tinuous throughout  the  year,  except  on  Sundays.  It 
was  estimated  that  the  total  expense  of  the  meals  for 
a  complete  year  would  be  something  over  ;^300o, 
and  the  cost  of  each  meal  per  head  works  out  at 
somewhere  between  i|d.  and  2d. 

Even  under  a  systematic  and  complete  inquiry 
system,  it  was  freely  admitted  that  "  sometimes  the 
charity  has  been  abused  by  persons  who,  while  well 
able  to  feed  their  children,  take  advantage  of  it  to 
lessen  their  own  effort  ;  and  no  attempt  was  made  to 
disguise  the  difficulty  of  treating  cases  in  which  the 
necessities  of  the  children  are  due  to  the  indifference, 
drunkenness,  or  vicious  neglect  of  their  parents."  No 
real  success  attended  the  attempt  to  classify  the  chil- 
dren under  three  heads  :  "  firstly,  those  whose  parents 
are  in  permanent  poverty  ;  secondly,  those  who  are  in 
temporary  poverty  ;  and,  thirdly,  those  who,  through 
indifference  or  vice,  could  feed  their  children,  but  do 
not."  With  regard  to  this  last  class,  the  Committee 
"  did  not  feel  it  right  that  the  charitable  public  or  the 
rates  should  be  charged  in  such  cases."  There  were 
also  many  cases  where  permanent  poverty  made  it 
impossible  for  the  parents  to  provide  adequate  sup- 
port for  a  numerous  family.  As  a  witness  pointed 
out  to  the  Inter-Departmental  Committee  of  1905, 
"  We  are  actually,  by  feeding  the  children,  virtually 
helping  the  employer  to  go  on  paying  low  wages." 

Of  course,  in  London,  the  vastness  of  the  problem 
made  the  effective  organisation  of  a  proper  system 
for  feeding  school  children  a  matter  of  exceeding  diffi- 
culty.    The  Joint  Committee  on  Underfed  Children, 

251 


Socialism  in  Local  Government 

created  in  1899,  and  representative  of  various  public 
and  private  bodies,  directed  attention  in  1905  to  the 
serious  defects  in  the  system  then  in  vogue.  They 
reported,  among  other  matters,  that  inquiry  into  the 
cases  had  generally  been  imperfectly  fulfilled,  and 
that  great  abuse  existed  in  consequence. 

The  average  number  of  children  fed  weekly  (Col.  i), 
and  the  average  number  of  meals  provided  (Col,  2), 
is  as  follows  : — 

Col.  I.  Col.  2. 

1900-1       .       .       .      18,857 


I90I-2 

20,085 

46,619 

1902-3 

22,206 

54,572 

1903-4 

.     23,842 

56,109 

1904-5 

•     26,951 

66,006 

These  figures  do  not  include  work  done  in  the 
Voluntary  Schools.  In  London,  as  in  Bradford,  the 
same  difficulty  was  experienced  in  helping  only  the 
deserving  and  really  needy  children.  The  evidence 
of  head  teachers  afforded  ample  ground  for  believing 
that  the  system  was  grossly  abused.  No  attempt 
was  made  to  follow  the  example  of  Bradford  in  en- 
forcing upon  parents  their  responsibilities  to  their 
children. 

In  April,  1905,  the  Local  Government  Board 
issued  an  Order  which  "greatly  increased  the  im- 
portance of  co-operation  between  Voluntary  Agencies 
for  feeding  children  and  the  Poor  Law  Guardians," 
with  a  view  to  preventing  fraud. 

A  month  earlier,  an  Inter-Departmental  Com- 
mittee on  Medical  Inspection  and  Feeding  of  School 
Children  attending  Public  Elementary  Schools  was 
appointed.  This  Committee  endeavoured  "  to  in- 
dicate briefly  some  of  the  means  which  may  usefully 

252 


Socialism  in   Education 

be  employed  in  selecting  the  children  for  admission 
to  free  or  aided  meals.  We  do  not,  however,  dis- 
guise from  ourselves  that  this  matter  of  the  selection 
of  children  is  replete  with  every  kind  of  difficulty. 
It  is  frequently  urged  that  it  is  not  possible  to  find 
any  defensible  principle  of  selection,  and  that  the 
only  alternatives  are  to  feed  all  or  to  feed  none. 
We  do  not  express  any  opinion  on  this  point,  or  on 
the  broad  question  whether  voluntary  agencies  for 
the  provision  of  meals  in  Public  Elementary  Schools 
should  exist.  The  question  is  postulated  in  our 
reference,  and  recognising  that  they  are  now  at 
work,  we  are  asked,  after  inquiry  into  their  methods, 
to  report  whether  the  relief  given  by  them  could  be 
better  organised.  We  are  clearly  of  opinion  that 
improvement  is  possible,  and  we  think  that  if 
regard  is  paid  to  the  facts  and  suggestions  above 
appearing,  it  may  be  possible  to  go  some  way  in 
the  direction  of  making  a  satisfactory  selection  of 
children,  at  any  rate  so  as  to  avoid  the  inclusion  of 
cases  where  help  is  unnecessary  or  mischievous.  In- 
cidentally, in  the  course  of  our  evidence  reference 
has  been  made  to  the  problems  which  are  raised 
by  the  existence  of  families  which  are  in  chronic 
destitution,  or  where,  owing  to  the  vicious  habits 
of  parents,  food  which  might  have  been  given  in  the 
home  is  withheld.  We  have  not  been  called  upon 
in  our  present  inquiry  to  solve  these  problems. 
But  we  may  properly  say  that  in  our  opinion  the 
voluntary  agencies  will  have  done  much  to  justify 
their  existence  if  they  can  help  to  feed  the  children 
where,  owing  to  the  illness  or  want  of  work  on  the 
part  of  the  breadwinners,  or  other  sufficient  cause, 

253 


Socialism  in   Local  Government 

the  family  is  in  temporary  need,  which  may  be 
expected  to  disappear  if  a  period  of  difficulty  can 
be  got  through  ;  and  we  recommend  that  they  should 
endeavour  to  make  this  class  of  children  their  first 
care."  ^ 

It  will  be  seen  that,  so  far  as  the  main  question 
is  concerned — Whether  the  rates  should  be  used  for 
the  feeding  of  school  children — the  report  is  silent. 
Its  only  usefulness  lies  in  the  history  which  it  gives 
of  voluntary  effort  and  its  effects. 

An  attempt  made  in  1906  to  pass  Bills  authorising 
local  bodies  to  provide  meals  for  school  children, 
resulted  in  the  appointment  of  a  Select  Committee 
to  consider  and  report  on  the  proposal.  Their 
report  stated  : — 

"  2.  The  inadequate  feeding  of  the  children  at- 
tending Public  Elementary  Schools  has  forced  itself 
into  recognition  as  a  real  evil  in  some  large  towns, 
although  the  evidence  submitted  tends  to  show  that 
such  evil  is  limited  in  extent  and  more  or  less 
spasmodic  in  regard  to  period  of  occurrence. 

"  3.  A  general  review  of  the  evidence  would 
appear  to  suggest  that  the  main  causes  contributing 
to  the  underfed  or  otherwise  ill-nourished  condition 
of  children  attending  Public  Elementary  Schools  are 
the  social  conditions  in  which  many  of  the  poorer 
people  in  large  towns  live,  or  the  lack  of  employ- 
ment. In  other  cases  stress  of  work  prevents  the 
parents  or  other  relatives  from  being  at  home  to 
prepare  the  mid-day  meal  ;  while  the  intemperate 
habits  and  thriftlessness  of  a  certain  proportion  of 
the  parents  weaken  the  natural  affections  upon  which 

^  Para.  237. 
254 


Socialism  in   Education 

a  sense  of  parental  responsibility  is  founded.  De- 
plorable ignorance  also  obtains  in  regard  to  the 
nature  and  proper  preparation  of  food  suitable  for 
children. 

"  4.  Therefore,  whatever  changes  may  be  pro- 
posed, it  is  clear  that  in  many  cases  no  fully  effective 
remedy  will  be  found  until  an  improvement  takes 
place  in  the  habits  and  surroundings  of  the  parents, 
but  the  recognition  of  this  fact  does  not  absolve  us 
from  considering  very  carefully  whether,  by  legisla- 
tion or  otherwise,  some  measure  of  amelioration  may 
not  be  effected. 

"5.  Evidence  was  laid  before  the  Committee  to 
show  that  the  anaemic  or  otherwise  unhealthy  appear- 
ance which  many  children  present  in  school  is  often 
erroneously  referred  by  teachers  and  other  casual 
observers  to  the  want  of  food.  Indeed,  evidence 
was  forthcoming  to  show  that  it  is  very  difficult  to 
trace  the  source  from  which  the  unhealthy  condition 
of  the  children  arises,  and  that  it  might  be  due  to 
congenital  causes,  late  hours,  insanitary  surroundings, 
uncleanliness,  or  work  out  of  school  hours. 

"  6.  While  it  is  beyond  our  reference  to  take  any 
steps  to  deal  with  such  widespread  social  evils,  the 
Committee  feel  that  their  existence  must  be  borne  in 
mind  in  any  attempt  to  apply  the  remedy  provided 
in  the  Bill."  ^ 

After  dealing  with  the  existing  voluntary  system, 
and  pointing  out  that  the  voluntary  agencies  possess 
neither  statutory  powers  of  recovery  from  parents 
who  are  able  to  pay  but  unwilling  to  do  so,  nor  any 

1  Report  of  the  Select  Committee  of  l()o6  on  Feeding  of  School  Children, 
pp.  4  and  5. 

255 


Socialism  in  Local  Government 

means  of  punishing  neglectful  parents,  except  through 
the  agency  of  the  Society  for  the  Prevention  of 
Cruelty  to  Children,  and  that  the  financial  support 
must  often  be  precarious  in  the  case  of  voluntary 
schemes,  the  report  recommended  : — 

"  I.  That  it  is  expedient  that  the  Local  Education 
Authority  should  be  empowered  to  organise  and  direct 
the  provision  of  a  mid-day  meal  for  children  attending 
Public  Elementary  Schools,  and  that  statutory  powers 
should  be  given  to  Local  Authorities  to  establish 
Committees  to  deal  with  school  canteens. 

'*  2.  That  such  Committees  should  be  composed 
of  representatives  of  the  Local  Education  Authority, 
representatives  of  the  voluntary  subscribers,  and, 
where  thought  desirable,  a  representative  of  the  Board 
of  Guardians,  and  of  the  local  branch  of  the  Society 
for  the  Prevention  of  Cruelty  to  Children,  where  such 
exists.  That  the  Head  Teacher,  the  School  Attend- 
ance Officer,  and  the  Relieving  Officer  should  work 
in  association  with  such  Committees. 

"  3.  That  power  should  be  given  for  the  Local 
Education  Authorities,  when  they  deem  it  desirable, 
to  raise  loans  and  spend  money  on  the  provision  of 
suitable  accommodation  and  officials,  and  for  the 
preparation,  cooking,  and  serving  of  meals  to  the 
children  attending  Public  Elementary  Schools. 

"  4.  That  only  in  extreme  and  exceptional  cases, 
where  it  can  be  shown  that  neither  the  parents' 
resources  nor  Local  Voluntary  Funds  are  sufficient 
to  cover  the  cost,  and  after  the  consent  of  the  Board 
of  Education  as  to  the  necessity  for  such  expenditure 
has  been  obtained,  a  Local  Authority  may  have  re- 
course to  the  rates  for  the  provision  of  the  cost  of 

256 


Socialism  in  Education 

the  actual  food  ;  the  local  rate  for  this  purpose  must 
in  no  case  exceed  -sd.  in  the  £. 

"  5.  That  the  Local  Education  Authority  should, 
as  far  as  possible,  associate  with  itself,  and  encourage 
the  continuance  of  voluntary  agencies  in  connection 
with  the  work  of  feeding  of  children."  ^ 

Following  the  Report  of  the  Committee,  Parlia- 
ment passed  an  Act  authorising  the  use  of  the  rates 
(if  voluntary  effort  was  not  sufficient  to  meet  the 
need)  for  the  feeding  of  necessitous  school  children. 

The  first  part  of  the  Reference  to  the  Inter-Depart- 
mental Committee  of  1905  was  "to  ascertain  and 
report  on  what  is  now  being  done  and  wath  what 
result  in  respect  of  Medical  Inspection  of  Children 
in  Public  Elementary  Schools."  As  a  result  of 
their  inquiries  they  found  forty-eight  Authorities, 
under  Part  III.  of  the  Education  Act  of  1902,  in  addi- 
tion to  London,  in  whose  areas  a  definite  system  of 
medical  inspection  had  been  established  ;  that  the 
inspection,  in  most  cases,  was  of  recent  origin  ;  and 
was  as  a  general  rule  confined  to  the  discovery  of 
defects  of  eyesight,  hearing,  or  physical  develop- 
ment. No  treatment  of  the  children  was  undertaken, 
but  the  parent  was  notified  of  the  fact,  and  was 
expected  to  take  steps  to  get  the  necessary  remedy 
applied. 

Dealing  with  the  question  of  treatment,  the  Com- 
mittee point  out  that  "  in  the  view  of  Dr.  Kerr  (of 
the  London  County  Council)  and  others,  to  treat 
the  ailment  discovered  would  tend  to   pauperise  the 

^  Report  of  Select  Cominittee  of  1906   on   Feeding  if  School  ChiUireti, 
pp.  9  and  10. 

257  R 


Socialism  in  Local  Government 

parent."  In  the  opinion  of  the  Committee  on 
Physical  Deterioration,  "  In  no  instance  should  the 
Inspector  do  more  than  state  the  facts  that  require 
the  attention  of  the  parent,  cases  of  poverty  or 
neglect  being  left  to  the  proper  authorities  to  deal 
with.  We  may  further  point  out  that  treatment 
may  be  open  to  two  great  objections  :  in  the  first 
place,  if  the  children  were  to  be  treated  as  well  as 
examined,  the  cost  of  the  medical  inspection  would 
be  very  seriously  increased  ;  and  in  the  second  place, 
it  would  almost  inevitably  lead  to  complaints  from 
private  practitioners."  The  parents,  however,  ought 
to  be  notified  of  any  ailment  or  defect,  and  in  many 
cases  the  parent  is  only  too  glad  to  be  informed,  and 
at  once  takes  steps  to  get  the  child  treated.  "  There 
are,  however,  some  parents  who,  though  able  to 
provide  remedies,  are  careless  or  indifferent.  With 
these  nothing  can  be  done  as  a  rule,  however  zealous 
the  local  authority  may  be." 

Generally,  the  Committee  report  that  there  is  no 
doubt  "  that  the  medical  inspection  has  done  much 
towards  bringing  to  view  defects,  and  by  the  early 
treatment  of  them  the  children  are  saved  from  un- 
necessary suffering.  The  cost  of  medical  inspection 
is  also  stated  to  be  very  small  ;  "in  no  urban  area 
does  it  require  more  than  Tod.  rate,  generally  not 
so  much."  The  Report  concludes  by  stating  that 
"  the  poverty  of  the  parent,  and  more  often  his 
apathy  and  indifference,  if  not  positive  negligence, 
are  formidable  obstacles  to  the  care  of  the  child. 
Poverty  may  be  partly  met  by  charity,  but  the 
apathy  and  negligence  will  only  decrease  as  the 
parent   is  slowly   brought  to   see   the   material  gain 

258 


Socialism  in  Education 

which    results    from    giving    due    attention    to     his 
children's  ailments." 

The  Act  of  .1908  entrusted  to  Local  Education 
Authorities  the  duty  of  periodical  medical  inspection 
of  all  children  in  their  schools,  and  the  power  to 
devise  remedial  measures.  Following  this  legisla- 
tion, the  Board  of  Education  issued  a  memorandum 
directing  the  attention  of  the  authorities  to  the  fact 
that  the  first  object  of  the  inspection  was  to  secure 
the  simple  necessities  of  a  healthy  life.  It  is  also 
stated  that  much  of  the  work  does  not  necessitate  the 
skilled  and  expensive  services  of  the  doctor,  and  the 
co-operation  of  the  parent,  the  teacher,  the  school- 
nurse,  the  health-visitor,  and  the  school  manager  are, 
therefore,  to  be  sought  and  utilised  as  far  as  possible. 

It  is,  perhaps,  too  early  to  fully  judge  of  the  effect 
of  these  two  important  Acts,  which  are  tremendous 
steps  towards  the  realisation  of  the  Socialist  ideal  of 
State  children.  We  know,  however,  that  the  feed- 
ing of  school  children  has  been  grossly  abused,  and 
that  in  London  alone  the  number  of  children  fed  in 
the  winter  of  1907-8  was  nearly  double  that  of  the 
previous  year.  And  that  in  spite  of  the  fact  that  the 
work  was  done  by  the  aid  of  voluntary  contributions. 
The  London  Education  Committee  has  found  it  almost 
impossible  to  investigate  the  individual  cases  of  some 
40,000  children  ;  the  400  odd  Voluntary  Care  Com- 
mittees cannot  exercise  a  proper  supervision,  and  not 
all  the  inquiries  of  officials  can  elucidate  the  con- 
dition of  the  parents  until  some  time  has  elapsed,  until, 
in  fact,  it  is  too  late  to  take  proceedings  against  the 
parents. 

259 


45  per 

cent 

17-73 

5.41 

4.76 

3-53 

2.29 

Socialism  in  Local  Government 

According  to  a  report  to  the  London  County 
Council/  "  '  Drink  and  unemployment  are  the  root 
causes  of  the  underfed  condition  of  the  children.' 

''  Twelve  of  the  poorest  districts  were  taken  as 
suitable  places  for  investigations,  and  12 18  families, 
possessing  3334  children,  were  visited.  The  causes 
of  children  being  underfed  are  tabulated  as  follows  : — 

Drink 

Casual  labour  . 

Unemployment 

Desertion 

Illness 

Low  wages 

The  Socialists,  too,  have  deliberately  used  their 
energies  to  persuade  parents  to  avail  themselves  of 
the  school  meals,  though  well  able  to  provide  for 
their  own  children,  and  so  far  no  effective  steps  have 
been  taken  to  prevent  abuse.  There  has,  in  fact, 
been  very  largely  a  repetition  of  what  occurred  in 
the  case  of  the  Johanna  Street  School  in  Lambeth 
when  it  was  visited  by  Sir  John  Gorst,  the  Countess 
of  Warwick,  and  Dr.  Macnamara  early  in  the  year 
1905.  The  school  is  situated  in  a  poor  district,  and 
in  response  to  the  request  that  all  children  who  had 
not  had  any  breakfast  should  rise  in  their  places,  a 
vast  percentage  stood  up.  Fortunately,  the  Lam- 
beth Board  of  Guardians  made  an  inquiry  into  the 
cases  of  about  20  boys  and  70  girls  who  had  been 
reported  as  attending  school  without  breakfast.  The 
homes  of  the  children  were  all  visited,  and  the  parents 
were  requested  to  apply  to  the  Relieving  Officer  for 
food   if   they  wanted  it.     Only  one    application  for 

1  Daily  Mail,  July  9,  1908. 
260 


Socialism  in  Education 

food  was  received.  The  result  of  the  inquiry  showed 
that  "  in  some  cases  the  heads  of  the  famiHes  were 
in  work,  and  in  others,  the  combined  earnings  of 
the  family  ranged  from  20s.  to  73s.  weekly.  Some 
of  the  parents  said  that  they  did  not  give  their 
children  food  before  going  to  school  as  they  knew 
that  if  they  did  not  do  so  they  would  receive  it  at 
the  school,  as  the  children  of  other  people  got  food 
there,  and  they  did  not  see  why  theirs  should  not 
too." 

What  happened  at  Johanna  Street  School,  Lam- 
beth, is  taking  place  to  a  greater  or  lesser  degree  at 
practically  every  school  where  free  meals  are  given. 
The  supposed  safeguards  are  a  farce.  The  local 
authorities  cannot  protect  themselves  against  whole- 
sale fraud  ;  the  inquiry  system  is  almost  wholly 
neglected.  If  fraud  is  detected  the  local  authorities 
are  loth  to  prosecute,  partly  for  political  considerations, 
and  partly  because  the  summonses  to  be  issued  would 
involve  an  enormous  expense,  with  practically  little 
good  result. 

It  is  quite  clear  that  if  we  pursue  the  present 
fatuous  course,  a  few  years  will  see  the  example 
of  Paris  repeated.  In  one  district  of  the  French 
capital  alone,  in  twenty-one  years  the  number  of 
free  meals  supplied  rose  from  2688  to  517,232, 
though  these  meals  were  supposed  to  be  given  only 
in  cases  of  necessity  after  the  fullest  inquiry  into  the 
state  of  the  family. 

The  medical  examination  of  children  also  pro- 
mises to  grow  into  medical  treatment,  though 
Parliamentary  Committees  and  Government  Depart- 
ments have  pronounced  against  such  a  development. 

261 


Socialism  in  Local  Government 

Yet,  if  the  precedent  of  "free"  education  and  "free" 
meals  throws  any  light  on  the  possible  trend  of 
events,  we  are  bound  to  admit  that  in  the  case  of 
many  thousands  of  children  "  free  "  medical  treatment 
will  follow.  Just  consider  for  a  moment  how  the 
present  position  has  been  reached.  Firstly,  many 
parents  could  not  afford  to  pay  for  the  education 
of  their  children,  the  State  could  not  draw  any 
distinction  between  the  various  classes  of  parent,  and 
"  free  "  education  was  established.  Secondly,  some 
parents  send  their  children  to  school  underfed.  That 
it  is  not  possible  to  teach  underfed  children  becomes 
the  plea  for  State  feeding  of  school  children.  Thirdly, 
many  children  need  medical  inspection  and  treat- 
ment. The  State  cannot  teach  children  who  are 
defective  in  health.  The  State,  therefore,  will  make 
an  examination  of  the  children,  and,  in  cases  of 
defect,  the  parents  will  be  expected  to  secure  medical 
treatment  of  their  children.  Now,  thousands  of 
parents  will  not  do  anything  of  the  kind,  and  so  the 
State  will  be  driven  into  providing  medical  treatment 
at  the  expense  of  the  general  body  of  ratepayers. 

Let  us  go  a  step  farther.  It  is  not  to  be  denied 
that  a  large  number  of  children  suffer  from  ailments 
due  to  lack  of  proper  clothing.  If  medical  treatment 
of  children  becomes  part  of  the  duty  of  the  Local 
Education  Committees,  it  will  involve  the  proper 
clothing  of  a  formidable  percentage  of  scholars  at 
the  expense  of  the  rates. 

We  long  ago  abandoned  the  belief  that  it  was 
the  duty  of  parents  to  train  their  children  for  the 
responsibilities  of  life,  and  by  the  adoption  of  "  free  " 
education  laid  the  duty  upon  the  nation.      Nearly  a 

262 


Socialism  in  Education 

generation  since,  Herbert  Spencer  observed  that 
"  everywhere  there  is  a  tacit  enunciation  of  the 
marvellous  doctrine  that  citizens  are  not  responsible 
individually  for  the  bringing  up  each  of  his  own 
children,  but  that  these  same  citizens,  incorporated 
into  a  Society,  are  each  of  them  responsible  for  the 
bringing  up  of  everybody  else's  children."  ^  And  it 
is  a  tribute  to  the  philosopher's  judgment  that  he 
foretold  the  early  approach  of  the  day  when  the 
State  would  make  itself  responsible  also  "  for  the 
proper  feeding  and  clothing  of  children." 

With  the  frank  renunciation  of  parental  responsi- 
bility which  is  involved  in  State  education,  feeding, 
clothing,  and  medical  inspection  and  treatment  of 
children,  it  is  perfectly  useless  to  expect  that  any 
class  of  parent  will  for  long  persist  in  carrying  out 
duties  which  the  State  is  willing  to  undertake,  and 
to  the  cost  of  which  he  has  to  contribute,  even 
though  he  now  fulfils  his  duty  to  his  own  offspring 
in  all  these  matters.  Instead  of  diminishing  State 
action,  as  the  legislature  seems  to  contemplate,  the 
tendency  will  be  all  the  other  way.  Instead  of  diminu- 
tion of  free  meals,  medical  treatment,  and  clothing, 
there  will  be  a  general  and  alarming  increase.  The 
nurture  of  the  "  unfit "  will  multiply  that  class  at 
the  expense  of  the  able  citizens.  The  latter,  burdened 
with  the  load  of  taxation  necessary  to  carry  out  the 
new  policy,  will  tend  to  become  a  slowly  diminishing 
body.  Unless,  of  course,  the  force  of  circumstances 
drives  the  legislature  into  control  of  marriages,  and 
into  drastic  supervision  of  the  "  inefficient." 

And  here  we  arrive  at  the  crucial  point.     Either  the 

^  TAe  Study  of  Sociology,  p.  369. 
263 


Socialism  in  Local  Government 

state  must  retreat  from  the  position  it  has  assumed 
towards  the  children,  or  it  must  go  still  farther, 
and  lay  down  the  proposition  that  if  the  children 
of  the  "  unfit "  are  to  be  dependent  upon  the  general 
body  of  citizens,  then  the  parents  must  be  subjected 
to  rigid  disciplinarian  measures.  It  is  useless  to 
continue  to  drift.  It  may  be  that  the  end  in  view 
is  some  such  paternal  discipline,  but  the  Acts  of 
Parliament,  the  Reports  of  Committees,  and  the 
Memoranda  of  Government  Departments  are,  as 
we  have  seen,  singularly  destitute  of  any  desire 
to  grapple  with  the  problem  of  disciplining  bad 
parents.  They  are  content  to  hint  at  "  development 
of  the  problem,"  and  the  need  of  further  data  before 
laying  down  fresh  schemes. 

The  general  situation,  however,  demands  prompt 
action  along  the  lines  suggested  by  Professor 
Marshall  for  dealing  with  "the  exceptional  case 
of  the  Residuum."  "  A  beginning  might  be  made 
with  a  broader,  more  educative,  and  more  generous 
administration  of  public  aid  to  the  helpless.  The 
difficulty  of  discrimination  would  need  to  be  faced, 
and  in  facing  it  local  and  central  authorities  would 
obtain  much  of  the  information  needed  for  finding, 
and  in  extreme  cases  for  controlling,  those  who 
are  weak,  and  especially  those  whose  weakness  is 
a  source  of  grave  danger  to  the  coming  genera- 
tion. .  .  .  The  case  of  those  who  are  responsible 
for  young  children  would  call  for  a  greater  expendi- 
ture of  public  funds,  and  a  more  strict  subordination 
of  personal  freedom  to  public  necessity.  The  most 
urgent  among  the  first  steps  towards  causing  the 
Residuum   to   cease  from  the   land   is    to   insist   on 

264 


Socialism  in   Education 

regular  school  attendance  in  decent  clothing,  and 
with  bodies  clean  and  fairly  well  fed.  In  case  of 
failure  the  parents  should  be  warned  and  advised  ; 
as  a  last  resource  the  homes  might  be  closed  or 
regulated  with  some  limitation  of  the  freedom  of 
parents.  The  expense  would  be  great  ;  but  there 
is  no  other  so  urgent  need  for  bold  expenditure. 
It  would  remove  the  great  canker  that  infects  the 
whole  body  of  the  nation  ;  and  when  the  work 
was  done,  the  resources  that  had  been  absorbed  by 
it  would  be  free  for  some  more  pleasant  but  less 
pressing  social  duty."  ^ 

It  is  this  side  of  the  question  which  has  been 
wholly  neglected  by  Parliament.  Instead  of  a 
well-balanced  scheme  for  sane  treatment  of  the 
children  and  the  application  of  stern  disciplinary 
measures  to  the  parents  until  the  evil  had  well-nigh 
disappeared,  we  have  hastily  adopted  a  system  which 
merely  touches  the  surface  of  the  disease,  nay, 
aggravates  it  without  effecting  any  improvement. 
At  the  same  time  it  has  given  to  the  Administrative 
Socialist  the  chance  to  accomplish  one  more  step 
in  the  Socialist  plan,  namely,  the  substitution  of 
the   State  for  the  parent. 

To  summarise  our  conclusions :  that  to  ail 
children  should  be  secured  a  good  education  to 
fit  them  for  the  responsibilities  of  life  is  an  evident 
truism.  And  it  is  necessary  to  protect  the  child, 
to  some  extent,  against  the  ignorance  and  neglect 
of  the  parents  ;  and  where  that  protection  involves 
an  expenditure  of  public  money,  the  parents  should 

^  Principles  of  Economics,  p.  714. 
265 


Socialism  in  Local  Government 

pay,  or,  if  unable  to  do  so,  should  be  controlled 
and  regulated  by  the  State  as  inefficients.  This 
may  involve  considerable  interference  with  the 
parents.  But  we  ought  to  be  prepared  to  consent 
to  such  interference  so  long  as  it  consists  in  making 
the  parents  recognise  their  duties,  either  by  doing 
the  work  themselves,  or  by  enforcing  payment  by 
them  of  the  actual  cost,  or,  in  extreme  cases,  of 
placing  the  parents  under  a  control  almost  as  strict 
as  that  applied  to  lunatics. 

We  may  contemplate  such  action  without  dismay. 
It  is  not  Socialism,  but  a  sane  control  and  regulation 
tending  to  efficiency  and  individual  initiative.  It 
will  abolish  the  grave  danger  to  the  community 
which  is  threatened  by  the  existence  of  the  ever- 
growing body  of  the  "  unfit." 


266 


XVII 
SOCIALISM    IN    THE    POOR    LAW 

The  principles  underlying  our  Poor  Law  system  are 
seldom  seriously  considered.  Compared  with  other 
national  institutions,  the  relief  of  the  indigent,  as  has 
been  well  observed,  demands  careful  explanation 
and  some  defence,  because  "  it  establishes  a  state  of 
things  in  which  persons  are  not  obliged,  unless  they 
choose,  to  provide  themselves  with  the  means  of 
subsistence  ;  whilst  those  who  work  for  their  own 
living  are  compelled,  whether  they  like  it  or  not,  to 
maintain  those  who  will  not  or  cannot  support  them- 
selves." ^  It  is,  therefore,  very  difficult  to  distinguish 
Poor  Law  administration  from  Socialism. 

The  justification  for  the  Poor  Law  is  based  upon 
two  grounds.  The  first  is  the  alleged  right  of  every 
one  to  the  means  of  subsistence — if  not  by  his  own 
personal  endeavour,  then  by  the  collective  aid  of 
the  State.  This  right  is  not  admitted  by  any  civilised 
country,  though  the  Socialists  have  at  various  times 
tried  to  secure  its  recognition.  For  all  practical 
purposes,  the  position  may  be  described  thus  :  The 
right  of  the  indigent  to  be  assisted  is  not  acknow- 
ledged, but  it  is  the  duty  of  the  State  to  help  them. 
This  may  appear  to  be  a  strange  and  illogical  attitude. 

The  wisdom  of  it,  however,  is  seen  when  we  consider 

^  Fowh  071  the  Poor  Law,  p.  i. 
267 


Socialism  in  Local  Government 

that  "the  want  of  any  recognised  title  to  rehef 
would,  under  certain  circumstances,  produce  a  Re- 
volution ;  and  that,  as  a  matter  of  fact,  the  French 
Revolution  was  largely  caused  by  the  existence  of  indi- 
gence driven  to  despair  by  the  hopelessness  of  relief," 
On  the  other  hand,  it  might,  with  just  as  much  force, 
be  urged  that  for  the  State  to  give  ''  a  legal  right  to 
relief  would,  under  certain  circumstances,  lead  to 
practical  Communism,  as  it  had  done  in  England  at 
the  time  of  the  Poor  Law  Reform  of  1834."^ 

Therefore,  the  second  reason  given  for  the  existence 
of  a  Poor  Law  system  is,  that  it  is  expedient,  for  the 
good  of  the  community,  to  relieve  destitution.  Other- 
wise the  existence  of  Society  might  be  endangered. 

The  evils  which  follow  unrestrained  relief  of  the 
destitute  by  the  State  are  fully  described  in  the 
Report  of  the  Poor  Law  Commission  of  1834,  and 
are  too  notorious  to  need  repetition.  It  is  sufficient 
to  say  that  Poor  Law  administration  in  the  early 
part  of  the  nineteenth  century  had  brought  about 
what  a  Fabian  Socialist  describes  as  "premature  and 
inexpert  collectivism," 

The  reform  which  followed  the  Report  of  1834 
endeavoured,  with  some  success,  to  establish  this 
principle  : — 

"The  fundamental  principle  with  respect  to  the 
legal  relief  of  the  poor  is,  that  the  condition  of  the 
pauper  ought  to  be,  on  the  whole,  less  eligible  than 
that  of  the  independent  labourer.  The  equity  and 
expediency  of  this  principle  are  equally  obvious. 
Unless  the  condition  of  the  pauper  is,  on  the  whole, 
less  eligible  than  that  of  the  independent  labourer, 

^  Fowh  on  the  Poor  Law,  p.  8. 
268 


Socialism   in  the  Poor  Law 

the  law  destroys  the  strongest  motives  to  good 
conduct,  steady  industry,  providence,  and  frugaHty 
among  the  labouring  classes,  and  induces  persons, 
by  idleness  or  imposture,  to  throw  themselves  upon 
the  poor  rates  for  support.  But  if  the  independent 
labourer  sees  that  a  recurrence  to  the  poor  rates  will, 
while  it  protects  him  against  destitution,  place  him 
in  a  less  eligible  position  than  that  which  he  can 
attain  to  by  his  own  industry,  he  is  left  to  the  undis- 
turbed influence  of  all  those  motives  which  prompt 
mankind  to  exertion,  forethought,  and  self-denial. 
On  the  other  hand,  the  pauper  has  no  just  ground 
for  complaint  if  at  the  same  time  that  his  physical 
wants  are  amply  provided  for,  his  condition  should 
be  less  eligible  than  that  of  the  poorest  class  of  those 
who  contribute  to  his  support."  ^ 

To  this  statement  of  the  two  chief  principles  of 
the  Poor  Law  may  be  added  another  aim,  viz. 
improvement  of  the  condition  of  the  poorer  classes. 

Now,  in  effect,  the  Act  of  1835  was  designed  to 
carry  out  those  principles,  and  to  preserve  an  in- 
dustrious population  from  ruin  by  abolishing  the 
Socialistic  system  under  which  the  idle,  who  would 
not  work  for  their  own  support,  existed  at  the  cost 
of  their  toiling  brethren,  and,  what  is  more,  lived  in 
the  same  comfort,  or  even  greater  comfort,  than  the 
independent  working  man.  For  some  sixty  years 
the  intention  of  the  Act  was,  on  the  whole,  strictly 
followed,  though  the  idea  of  the  Reformers  of  1834 
that,  at  no  very  distant  date,  outdoor  relief  would 
cease  to  exist,  has  never  been  fully  realised. 

With  the  growth  of  modern  Socialism  there  has 

^  Report  on  the  Poor  Law,  1839,  p.  45. 
269 


Socialism  in  Local  Government 

naturally  been  an  attempt  to  revive  the  Socialistic 
element  in  the  Poor  Law  system.  Instead  of  main- 
taining a  well-balanced  compromise  between  Indi- 
vidualism and  Collectivism,  all  restraint  has  been 
abandoned  in  recent  legislation.  As  the  result  of 
Socialist  influence,  thei'e  is  no  longer  any  serious 
attempt  to  restrict  outdoor  relief.  Practically  no 
discomfort  and  stigma  attaches  now  to  the  pauper, 
and  his  position  is,  in  many  respects,  far  better  than 
that  of  the  independent  labourer. 

Let    us    glance    at    some    recent    measures.     The 
Outdoor  Relief  (Friendly  Societies)  Act,  1894,  em- 
powered Guardians,   when  giving  outdoor  relief,  to 
ignore  any  sum  up  to  five  shillings  a  week  which  the 
applicant  for  relief  might  be  receiving  as  a  member 
of  a  Friendly  Society.     In  1904,  a  further  step  was 
taken,  and  the  optional  power  was  made  imperative. 
The    Medical    Relief    Disqualification    Removal   Act, 
1885,  allowed  medical  outdoor  relief  to  be  accepted 
without  disfranchisement.     Then  we  have  the  pro- 
posal to  provide  cottage  homes  where  the  aged  poor 
will  live  in  more  comfort  than  is  generally  enjoyed 
by  the  industrious  labourer  who  has  made  provision 
for  his  old  age  out  of  his  wages  and  savings.     There 
has  also  been  a  vast  improvement  in  the  dietary  of 
the  workhouse  as  the  result    of   Local  Government 
Board  Orders.     The  Unemployed  Workmen's  Act  of 
1905  marked  a  further  advance  towards  the  realisa- 
tion of  Socialist  ideals.     Last,  but  not  least,  the  present 
Session  of  Parliament  (1908)  has  seen  the  passage 
into  law  of  an  Old  Age  Pensions  Scheme,  whereby 
any  person  of  the  age  of  seventy  or  over  who  belongs 
to  the  "indefinable  class  of  the  deserving  poor"  is 

270 


Socialism  in  the  Poor  Law 

to  receive  a  pension  of  five  shillings  a  week.  This 
scheme  was  described  by  Lord  Rosebery  in  the 
House  of  Lords  as  "  pure  Socialism." 

The  danger  attendant  upon  such  legislation  is 
clearly  indicated  by  the  fact  that  at  the  first  Parlia- 
mentary bye-election  ^  after  the  Act  had  passed,  one 
of  the  candidates  advocated  an  increase  in  the 
amount  of  the  pension,  while  the  trade  unions  are 
clamouring  for  a  reduction  of  the  age  qualification. 

The  general  Socialistic  trend  of  Poor  Law  relief 
in  recent  years  is  easily  traceable  when  compared 
with  the  Socialist  programme  of  the  'nineties  for  the 
reorganisation  of  Poor  Law  administration. 

"  Object. — To  provide  generously,  and  without 
stigma,  for  the  aged,  the  sick,  and  those  destitute 
through  temporary  want  of  employment,  without 
relaxing  the  tests  against  the  endowment  of  able- 
bodied  idleness. 

'^ Means. — i.  The  separation  of  the  relief  of  the 
aged  and  the  sick  from  the  workhouse  system, 
by  a  universal  system  of  aged  pensions,  and 
public  infirmaries. 

2.  The  industrial  organisation  and  technical  edu- 

cation of  all  able-bodied  paupers. 

3.  The  provision  of  temporary  relief  works  for  the 

unemployed. 

4.  The  supersession  of  the  Boards  of  Guardians 

by  the  local  municipal  authorities."  ^ 
There  is  practically  no  item  in  that  Socialist  pro- 
gramme which  has  not  been  either  wholly  or  partially 
realised.     And  yet  the  demands  of  Socialists  are  by 
no  means  exhausted. 

^  Haggerston,  July  1908.  ^  Fabian  Essays  in  Socialism,  p.  55. 

271 


Socialism  in  Local   Government 

Of  the  practical  consequences  of  this  poHcy  we 
can  judge  by  the  results  of  Socialistic  rule  in  the  local 
Poor  Law  administration  of  Poplar  and  West  Ham, 
as  stated  in  the  Reports  of  Local  Government  Board 
inquiries.  Taking  the  case  of  Poplar,  we  gather  the 
following  salient  facts  from  the  Report  of  the  Local 
Government  Board  Inspector  (p.  19): — 

^^  Outdoor  Relief. — Up  to  1892  outdoor  pauperism 
in  Poplar  bore  about  the  same  proportion  to  popu- 
lation as  in  the  whole  of  London.  In  the  following 
year  Mr.  Crooks  joined  the  Board  of  Guardians,  and 
from  that  point  Poplar  exceeds  the  rest  of  London. 
The  change  may  best  be  seen  from  the  following 
figures,  which  show  the  proportion  of  outdoor 
pauperism  in  Poplar  and  London  respectively  per 
1000  of  the  population: — 


Year. 

Poplar. 

London 

ist  January  1885  .    .    .    .    q 

10 

„     1886  . 

10 

10 

»     1887  . 

II 

II 

„     1888  . 

10 

II 

„     1889  . 

10 

II 

„     1890  . 

10 

10 

„     1891  . 

10 

10 

„     1892  . 

9 

9 

1893  . 

II 

9 

1894  . 

•   IS 

10 

1895  • 

12 

10 

„     1896  . 

13 

9 

1897  . 

12 

9 

„     189S  . 

•   13 

9 

1899  . 

13 

9 

„     1900  . 

14 

9 

„     1901  . 

15 

9 

»     1902  . 

.   17 

9 

»     1903  • 

21 

10 

„     1904  . 

24 

10 

1905  . 

.   47 

II 

„     1906  . 

43 

II 

272 


Socialism  in   the  Poor  Law 

According  to  the  Report,  the  main  increase  seems 
to  have  sprung  from  a  resolution  passed  by  the 
Guardians  in  November,  1904,  under  which  rehef 
in  kind  was  given  to  able-bodied  men  without  a  test 
of  any  sort  being  imposed  (p.  20). 

The  dietary  of  the  workhouse  was  of  the  very 
best.  The  Board  of  Guardians  "  were  also  deter- 
mined, whether  by  legal  or  illegal  methods,  to 
stretch  the  powers  of  the  Poor  Law,  so  that  in  a 
Socialistic  fashion  it  could  give  easy  and  comfort- 
able relief  to  able-bodied  paupers  and  the  unem- 
ployed "  (p.  38). 

"  The  general  pauperisation  of  the  inhabitants  of 
the  Union  must  mainly  be  attributed  to  the  policy 
of  the  Guardians,  for  the  evidence  shows  that  there 
is  no  change  in  the  economic  conditions  of  the  dis- 
trict which  would  otherwise  account  for  it.  And  yet 
the  effects  of  this  policy,  in  the  view  of  one  of  the 
persons  mainly  responsible,  can  only  be  remedied  by 
general  changes  in  the  law  of  the  country  "  (p.  40). 

"  It  is  difficult  to  avoid  the  conclusion  that  both 
the  rise  and  the  decrease  in  pauperism  were  mainly 
due  to  the  deliberate  action  of  the  Guardians  ;  and 
that  the  absence  of  thrift  and  economy  which  char- 
acterised their  general  administration  was  also  in 
a  great  measure  deliberate.  Under  the  electoral 
conditions  which  prevail  at  Poplar,  neither  the  indi- 
vidual Guardians  nor  their  chances  of  re-election 
were  materially  affected  by  an  increase  of  rates,  and 
they  were  free  to  pursue  their  ulterior  aims  without 
much  personal  loss.  Those  aims  were  no  doubt  to 
produce  a  situation  which  would  compel  the  Govern- 
ment to  interfere,  so  as  to  bring  about  an  equalisation 

273  s 


Socialism  in  Local  Government 

of  the  rates  within  the  metropoHtan  area,  and  legis- 
lation with  regard  to  unemployment  in  accordance 
with  the  political  views  of  the  leaders.  The  Guardians 
appeared  some  time  ago  to  have  realised  that  their 
demonstration  had  not  been  successful  ;  but,  though 
the  factitious  pauperism  disappeared  as  soon  as  the 
relieving  officers  reverted  to  their  ordinary  practice 
in  dealing  with  able-bodied  applicants,  it  is  to  be 
feared  that  the  demoralisation  which  must  accom- 
pany lavish  grants  of  relief  will  long  be  felt  in  the 
district.  The  helpless  position  of  the  people  who  pay 
rates,  and  who  in  many  cases  are  little  better  off  than 
the  recipients  of  relief,  is  quite  pathetic  "  (p.  40). 

"  Giving  the  fullest  weight  to  these  considerations, 
Mr.  Crooks  and  Mr,  Lansbury  must  still  be  held  in 
no  small  degree  responsible  for  the  effects  of  a  policy 
which  has  led  to  the  pauperisation  of  great  numbers 
of  the  inhabitants  of  the  district,  to  a  subsidising  of 
women's  casual  labour  with  the  inevitable  growth  of 
sweating  and  of  starvation  wages,  and  to  an  increase 
of  the  expenditure  which  has  inflicted  much  hardship 
upon  struggling  tradesmen  and  others  "  (p.  40). 

In  no  Poor  Law  Union  has  Socialism  held  such 
uncontrolled  sway  as  in  Poplar.  And  the  economic 
results  have  been  disastrous. 

It  is  notorious  that  indulgence  in  Socialistic  ex- 
periments is  strongly  reflected  in  increased  taxation. 
The  cost  of  Poor  Law  relief  is  now  nearly  fourteen 
millions  every  year.  In  1885,  when  Socialism  began 
to  break  down  the  principles  underlying  the  Poor 
Law  which  were  formulated  in  1834,  the  cost  was 
6s.  3d.  per  head  of  population.  To-day  it  is  8s.  2d. 
per  head.    While  the  average  expense  of  a  pauper  child 

274 


Socialism  in  the  Poor  Law 

in  South  Australia  is  5s.  4fd.  a  week,  or  £14.,  os.  yd. 
a  3^ear,  the  cost  in  England  is  generally  double,  and 
sometimes  treble  and  fourfold.  As  Miss  Edith  Sel- 
lers, a  well-known  Poor  Law  expert,  has  pointed 
out :  "  Every  State  child  in  Bermondsey,  for  instance, 
costs  the  community  20s.  a  week  ;  every  State  child 
in  Poplar,  19s.  2d.;  in  Woolwich,  i8s.  jd. ;  and 
even  in  St.  George's  in  the  East,  15s.  6d."  1 

The  general  tendency  towards  the  application  of 
Socialist  methods  to  all  departments  of  Poor  Law 
relief  throughout  the  country  is  calculated,  unless 
arrested,  to  produce  the  same  lamentable  conse- 
quences as  in  Poplar.  The  movement,  moreover, 
has  by  no  means  diminished,  and  the  guides  of 
British  legislation  and  administration  will,  it  is  to 
be  feared,  continue  for  some  years  to  be  permeated 
with  Socialistic  influences.  Then  it  may  be  ex- 
pected that  Imperial  and  local  taxation,  driven  up 
to  an  enormous  height  in  order  to  provide  the  means 
for  Socialistic  experiments,  will  cause  a  swing  back 
of  public  opinion  into  paths  of  prudence. 

'  Albany  Review,  July,  1908. 


275 


XVIII 
THE   RIGHT  TO  WORK 

The  problem  of  unemployment  is  almost  as  old  as 
the  hills.  The  sight  of  an  efficient  labourer  willing  to 
work,  and  yet  unable  to  find  employment,  is  pitiable 
indeed.  It  is  not,  therefore,  matter  for  surprise  that 
many  schemes  for  the  solution  of  this  evil  have  been 
propounded.     All  have  proved  equally  futile. 

The  Administrative  Socialist  has  his  particular 
remedy.  He  urges  the  adoption  by  the  State  of 
the  Socialist  doctrine  of  "  the  right  to  work." 
Though,  as  we  shall  see  presently,  this  theory  is 
no  product  of  latter-day  Socialism,  its  present-day 
development  is  due  to  the  programme  of  the  In- 
dependent Labour  Party  for  1907-8.  After  setting 
forth  the  usual  claim  that  all  land  and  capital  should 
be  collectively  owned  and  managed,  the  programme 
demands,  "as  a  means  to  this  end,"  the  enactment 
of  certain  measures,  of  which  one  is  :  "  The  provision 
of  work  to  all  capable  adult  applicants,  at  recognised 
trade  union  rates,  with  a  statutory  minimum  of  six- 
pence per  hour.  In  order  to  remuneratively  employ 
the  applicants,  parish,  district,  borough,  and  county 
councils  to  be  invested  with  powers  to — 

(a)  Organise    and    undertake    such    industries    as 
they  may  consider  desirable. 

276 


The  Right  to  Work 

(b)  Compulsorily   acquire   land  ;    purchase,    erect, 

or    manufacture    buildings,    stock    or     other 
articles,  for  carrying  on  such   industries. 

(c)  Levy  rates  on  the  rental  values  of  the  district, 

and  borrow  money  on  the  security  of  such 
rates  for  any  of  the  above  purposes." 
This  scheme,  fraught  with  dire  consequences  to 
local  government,  found  legislative  expression  in 
"The  Unemployed  Workmen"  Bill,  which  came 
before  the  House  of  Commons  in  the  Session  of 
1907,  and  again  in  March,  1908.  On  the  latter 
occasion  it  was  defeated  by  265  votes  to  116  votes. 
That  so  large  a  body  of  support  should  have  been 
accorded  to  the  measure  makes  it  imperative  to 
carefully  examine  its  nature.  The  terms  of  the  Bill, 
as  explained  by  Mr.  J.  Ramsay  Macdonald,  M.P.,  in 
a  pamphlet  entitled  T/ie  Neiv  Unemployed  Bill  of  the 
Labour  Party,  are,  that  certain  local  authorities 
"  shall  be  the  local  unemployment  authority,"  and 
that  registers  for  the  unemployed  must  be  opened 
all  over  the  country.  Then  comes  the  vital  clause, 
No.  3  :  "  Where  a  workman  has  registered  himself 
as  unemployed,  it  shall  be  the  duty  of  the  local  un- 
employment authority,  subject  to  conditions  herein- 
after to  be  imposed,  to  provide  work  for  him  in 
connection  with  one  or  other  of  the  schemes  herein- 
after provided  or  otherwise,  or  failing  the  provision 
of  work,  to  provide  maintenance,  should  necessity 
exist,  for  that  person  and  for  those  depending  on 
that  person  for  the  necessaries  of  life.  Provided, 
that  a  refusal  on  the  part  of  the  unemployed  work- 
man to  accept  reasonable  work  upon  one  of  these 
schemes,  or  other  employment  upon  conditions  not 

277 


Socialism  in  Local  Government 

lower  than  those  that  are  standard  to  the  work  in 
the  locahty,  shall  release  the  local  unemployment 
authority  of  its  duties  under  this  section."  "This 
Clause  is  a  Right  to  Work  Clause,"  states  Mr. 
Macdonald. 

A  Central  Unemployment  Committee  is  to  be 
formed,  and  Commissioners  appointed  ;  also  local 
Committees,  for  "unemployed  schemes  must  be- 
come part  and  parcel  of  the  ordinary  duties  of  the 
ordinary  local  administrative  bodies."  Provision  is 
made  for  dealing  with  idlers  and  emigration,  and 
the  "  local  authority  shall  not  supply  workmen  to 
firms  of  employers  or  their  agents,  servants  or  repre- 
sentatives, during  times  of  trade  disputes  in  which 
these  firms  or  employers  are  involved."  It  will  be 
noted  that  while  employers  are  debarred  from  ob- 
taining workers  during  strikes,  there  is  no  provision 
preventing  strikers  from  obtaining  work  or  main- 
tenance from  the  local  authority.  Practically,  this 
Clause  7,  subsection  5,  places  the  capitalist  at  the 
mercy  of  his  workmen,  because  they  can  always 
demand  higher  wages,  &c.,  and  failing  to  obtain 
them  by  negotiation,  can  strike  and  fall  back  on  the 
local  authority  for  maintenance. 

The  financial  clauses  provide  for  national  and 
local  contributions,  but  these  provisions  must  not  be 
regarded  as  being  more  than  provisional,  and  "  after 
experience  the  clause  will  probably  be  amended  so 
as  to  carry  out  the  intentions  of  the  Labour  Party 
with  greater  certainty."  Works  of  national  utility, 
such  as  afforestation  and  reclamation  of  land  from 
the  sea,  are  to  be  undertaken.  Further,  any  local 
unemployment     authority    may    provide     dwellings, 

278 


The  Right  to  Work 

buildings,  materials,  tools,  implements,  machinery, 
and  plant,  and  acquire  land  compulsorily,  for  the 
purposes  of  the  Act. 

Now,  "  The  Right  to  Work,"  in  simple  language, 
means  a  right  on  the  part  of  the  worker  to  have 
work  given  to  him  by  the  State.  Further,  as  is 
shown  by  the  plan  of  the  Independent  Labour  Party, 
the  recognition  of  that  right  involves  the  organisa- 
tion and  control  of  all  forms  of  industry,  so  that  all 
workers  can  be  supplied  with  employment  in  their 
own  particular  trade.  Otherwise,  how  secure  re- 
munerative employment  for  all  ? 

Moreover,  though  Mr.  Macdonald  admits  that  "we 
cannot  make  the  unemployed  the  founders  of  the 
Socialist  State,"  he  declares  in  the  same  pamphlet : 
"  We  shall  begin  a  new  form  of  social  organisation. 
.  .  .  Every  successful  attempt  made  to  fill  the  mouths 
of  the  unemployed  and  his  family,  not  by  charity, 
but  by  work  such  as  is  provided  for  in  this  Bill,  is  a 
stage  towards  the  complete  state  of  the  democratic 
organisation  of  industry.  The  solution  of  the  unem- 
ployed problem  is  the  beginning  of  the  Socialist 
State."  And  when  the  Bill  was  before  Parliament 
on  the  13th  March,  1908,  a  circular  sent  to  members 
of  Parliament  in  support  of  it  announced  that  this 
was  the  first  step  to  Socialism. 

We  thus  see  that  the  admission  by  Parliament  of 
this  right  practically  commits  the  country  to  the 
adoption  of  Socialism.  The  State  must,  through  the 
local  authorities,  exercise  vast  powers  over  property, 
and  also  control  the  lives  of  the  people  to  a  degree 
not  differing  from  absolute  slavery.  "  It  is  making  the 
State  God,  and  Labour  the  slave  ;  it  is  the  death-blow 

279 


Socialism  in  Local  Government 

to  all  free  dealing  between  man  and  man  under  the 
pretence  of  destroying  the  abuses  of  competition." ^ 

As  had  been  pointed  out  by  Professor  Flint,  the 
first  result  would  be  that  "  it  could  not  fail  to  take 
away  from  individuals  the  motives  which  had  con- 
strained them  to  seek  labour  for  themselves,  to  be 
careful  not  to  lose  it  when  they  got  it,  and  to  make 
while  they  had  it  what  provision  they  could  for  sup- 
porting themselves  when  they  might  not  have  it.  In 
other  words,  the  State,  by  assuming  the  responsibility 
of  finding  and  providing  labour  for  the  unemployed, 
would  necessarily  encourage  indolence  and  impro- 
vidence, favour  the  growth  of  irregular  and  insub- 
ordinate conduct  among  those  engaged  in  industrial 
occupation,  diminish  individual  enterprise  and  energy, 
and  deaden  the  sense  of  personal  responsibility.  And 
the  obvious  consequence  of  its  thus  demoralising  its 
citizens  by  leading  them  to  trust  to  its  intervention, 
instead  of  depending  on  their  own  exertions,  is  that 
it  would  find  itself  necessitated  to  employ  and  support 
them  in  large  numbers,  and  in  always  increasing 
numbers,  as  they  would  become  continually  less  in- 
clined and  less  fitted  to  take  care  of  themselves."  ^ 

Ample  evidence  of  this  evil  tendency  to  rely  on 
the  State  for  support  is  to  be  found  in  the  adminis- 
tration of  the  Unemployed  Act  of  1905,  which  went 
perilously  near  to  legislative  recognition  of  "  The 
Right  to  Work." 

In  London,  and  in  many  provincial  towns,  relief 
works  have  been  started  during  the  winter  slackness 
of  trade.  The  reports  of  Local  Government  Board 
inspectors   and    others   prove    that   the  evils  of   this 

1  Lamartine.  2  Socialism,  p.  410. 

280 


The  Right  to  Work 

system  of  dealing  with  unemployment  outweigh  the 
temporary  relief  afforded  by  it.  One  inspector  re- 
ported with  regard  to  the  West  Riding  of  Yorkshire, 
that  in  the  circumstances  under  which  work  for  the 
unemployed  had  been  provided,  "  there  seems  to  be 
every  likelihood  of  a  stereotyped  class  of  men  being 
evolved  who  will  be  content  to  live  on  three  days' 
work  a  week."  ^ 

Another  report  stated  that  "  irregular  relief  work 
has  such  charms  that  numerous  instances  have  been 
noted  of  men  throwing  up  regular  wages  at  i8s.  and 
19s.  a  week  to  '  earn  '  from  5s.  to  7s.  in  a  stone  yard." 
From  Manchester  and  Salford  it  was  stated  that 
"  many  men  under  a  labour  test  left  their  work  and 
forfeited  the  day's  relief  in  order  to  join  a  procession 
of  the  unemployed."  The  same  thing  happened  at 
the  Laindon  Labour  Colony,  and  with  the  connivance 
of  the  authorities  responsible  for  its  administration. 

The  report  of  Mr.  H.  Jenner  Fust  on  Poor  Law 
Administration  (Local  Government  Board  Annual 
Report,  1905-6)  stated:  "  Up  to  the  i6th  February, 
1906,  2500  persons  in  Liverpool,  including  144 
women,  had  applied  for  work.  Work  was  offered 
to  632  of  these,  and  accepted  by  370.  Of  the  re- 
mainder, 223  did  not  put  in  an  appearance,  28 
refused  to  work,  and  1 1  found  work  elsewhere.  .  .  . 
Investigation  has  shown  that  too  many  of  those  posing 
as  the  unemployed  are  either  incapable  of  work,  or 
are  unwilling  to  work  when  employment  has  been 
found  for  them." 

Another  report  of  Mr.  Nicholas  Herbert  on   Poor 
Law  Administration  (No.  33)  stated  : — 

^  Local  Governtnmt  Board  Annual  Report. 
281 


Socialism  in  Local  Government 

"At  Birmingham,  1454  applications  were  made  to 
the  Distress  Committee  ;  but  as  57  of  the  applicants 
gave  false  addresses  or  did  not  reside  within  the  city, 
the  number  to  whom  the  Committee  could  off er  work 
was  1397.  Of  this  number,  1196  were  selected  for 
work,  and  of  the  201  who  were  refused,  143  had  no 
one  depending  upon  them,  28  had  sufficient  income, 
9  were  referred  to  the  Poor  Law,  and  in  4  cases  the 
particulars  supplied  were  unsatisfactory.  Of  the  1 196 
cases  to  whom  employment  was  offered,  165  did  not 
turn  up  to  perform  the  work,  and  in  224  cases  time 
was  lost  by  the  men  working,  varying  from  men  who 
only  worked  one  hour  to  those  who  lost  but  half- 
an-hour.  Five  hundred  and  seventy-two  of  the 
applicants  had  either  small  pensions,  or  their  families 
were  able  to  earn  money.  The  following  table  shows 
the  income  of  these  applicants  : — 

31  apphcants  had  pensions  ranging  from  is.  6d. 

to  6s.  a  week. 
73  applicants  had  children  contributing  from  is. 

to  5s.  a  week. 
69  applicants  had  children  contributing  from  5s. 

6d.  to  I  OS.  a  week. 
55  applicants  had  children  contributing  from  los, 

6d.  to  15s.  a  week. 
14  applicants  had  children  contributing  from  i6s. 

to  19s.  a  week. 
13  applicants  had  children  contributing  from  20s. 

to  46s.  a  week. 
192  applicants  had  wives  earning  from   is,  to  5s. 

a  week. 
Ill  applicants  had  wives  earning  from  5s.  to  ids. 
a  week. 

282 


The  Right  to  Work 

14  applicants  had  wives  earning  from  los.  6d.  to 
46s.  a  week. 

Of  the  1454  appHcants,  967  were  unskilled 
labourers," 

Referring  to  the  thirty-sixth  Annual  Report  of  the 
Local  Government  Board,  1906-7,  we  find  that 
the  report  of  Mr.  E.  B.  Wethered  on  Poor  Law 
Administration  stated  :  "  It  is  the  unskilled  type  of 
workmen  who  chiefly  constitute  the  problem.  Very 
many  of  these  men,  doubtless,  are  not  too  fond  of 
work,  and  are  thriftless.  If  men  of  this  type  dis- 
cover that  in  times  of  depression  they  can  be  found 
work  out  of  public  funds,  they  are  not  likely  to 
exert  themselves  in  times  of  prosperity  with  a  view 
of  providing  against  less  prosperous  times"  (p.  312). 

Another  report  deals  with  a  foolish  example  of 
Poor  Law  administration  at  Leicester.  Alluding 
to  the  outdoor  labour  yard,  the  inspector  states  : 
"  Some  of  the  men  relieved  in  the  labour  yard  were 
no  doubt  hona-fide  unemployed  and  self-respecting 
workers,  but  there  are  very  strong  reasons  for  be- 
lieving that  there  were  others  not  deserving  of  the 
Guardians'  assistance,  and  in  no  way  entitled  to 
consideration.  The  continuous  employment  in  the 
labour  yard,  with  no  prospects  of  receiving  an 
independent  position,  must  have  had  the  effect  of 
demoralising  even  the  best  men.  The  number  of 
applicants  for  relief  became  so  great,  that  it  was 
practically  impossible  for  the  Guardians  to  exercise  a 
proper  discrimination  in  their  grants  of  relief. 

"  The  application  and  report  books  of  the  relieving 
officers  show  that  men  convicted  of  assault,  stealing, 
and  desertion  were  granted  relief  on  the  labour  test. 

283 


Socialism  in  Local  Government 

There  are  also  entries  in  these  books  that  men  have 
appeared  before  the  Guardians  the  worse  for  drink, 
and  yet  have  been  granted  rehef  on  the  labour  test. 
The  labour  yard  offered  to  too  many  who  were 
devoid  of  energy  a  constant  source  of  employment. 
In  February,  1906,  one  relieving  officer  had  on  his 
books  105  who  were  working  in  the  labour  yard  ; 
of  these  33  had  been  on  the  labour  test  for  one  year, 
7  for  two  years,  and  i  for  three  years. 

"  The  staff  of  relieving  officers  was  insufficient  to 
carry  out  the  necessary  investigations,  and  cases  of 
fraud  were  not  unknown.  Cases  of  obtaining  relief 
under  false  pretences  appeared  in  the  Leicester  police 
court  in  the  early  part  of  the  year.  Consequently 
the  Guardians  were  compelled  to  increase  their  staff, 
and  three  assistant  lady  relieving  officers  were  ap- 
pointed. This  enabled  the  relieving  officers  to  give 
more  time  to  the  visiting  and  investigation  of  the 
circumstances  of  the  applicants,  which  resulted  in  a 
decrease  of  numbers — a  strong  argument  in  favour 
of  the  appointment  of  a  superintendent  relieving 
officer  for  the  purpose  of  cross-visiting. 

"  The  effect  of  such  administration  has  been  what 
might  have  been  expected,  and  indeed  was  foretold 
by  some  of  the  Guardians.  The  rates,  in  spite  of  a 
largely  increased  valuation  of  property,  have  gone  up, 
and  houses  and  workshops  have  emptied,  with  conse- 
quent loss  to  the  owners  of  property  and  to  the  rates, 
while  industries  threaten  to  leave  the  town  "  (p.  322). 

The  report  of  Mr,  P.  H.  Bagenal  (p.  336)  stated, 
that  of  the  several  classes  who  seek  for  test  labour, 
one  class  consists  of  men  with  the  ''  settled  intention 
to  live  at  the  expense  of  others."    They  hold  "  the 

284 


The   Right  to  Work 

belief  that  they  can  force  the  Guardians  to  pro- 
vide regular  employment  for  them  out  of  the  rates. 
The  result  is  that  they  have  become  increasingly 
importunate  and  insolent  in  their  attitude.  The 
question  really  comes  to  this  :  whether  a  small  class 
of  sturdy  paupers  or  the  Guardians  are  to  be  per- 
mitted to  dictate  the  terms  of  relief.  The  Guardians 
have  the  remedy  in  their  own  hands.  Directly  test 
labour  becomes  continuous  and  an  end  in  itself,  it 
should  be  stopped.  The  Guardians  can  ofifer  full 
relief  to  these  men  and  their  families  in  the  institu- 
tions which  they  have  built  at  great  expense  to  the 
ratepayers.  There  they  can  be  maintained  until  such 
time  as  the  men  choose  to  devote  themselves  to 
honest  labour.  If  they  refuse  this  relief,  the  Guar- 
dians are  legally  justified  in  refusing  any  other 
means  of  maintenance.  Their  responsibility  is  dis- 
charged. The  situation  is,  on  a  small  scale,  exactly 
what  it  was  before  the  Poor  Law  was  amended  in 
1834,  when  paupers  were  manufactured  by  analogous 
methods  of  parish  relief.  The  remedy  then  applied 
on  a  large  scale  succeeded  in  reducing  able-bodied 
pauperism  to  a  minimum.  The  same  remedy  can 
be  applied  to-day  with  equal  success  if  only  suffi- 
cient moral  courage  is  forthcoming." 

The  opportunity  for  idleness  which  is  thus  afforded 
to  inefficient  workmen  is  not  the  worst  phase  of 
the  matter.  Lacking  moral  courage,  many  local 
authorities,  under  the  pressure  of  Labour-Socialists, 
and  local  demonstrations  and  deputations  of  "  un- 
employed," have  started  works,  in  most  cases  not 
immediately  necessary  or  of  use  to  the  locality,  in 
order  to  find  jobs  for  "  out  of  works." 

285 


Socialism  in  Local  Government 

The  consequence  has  been  that  these  works  have 
been  executed  at  an  abnormal  expense.  This  has 
been  borne  by  the  ratepayers,  the  great  majority 
of  whom  belong  to  the  working  classes.  Let  us 
quote  a  few  examples.  The  Metropolitan  Borough 
of  Stepney  in  the  winter  of  1904-5  decided  that 
the  use  of  road-sweeping  machines  should  be  dis- 
continued, and  that  hand  labour  should  be  substi- 
tuted. The  consequence  was  that  street  cleaning, 
which  under  usual  conditions  would  have  cost  ;^486, 
actually  cost  £'iS^9-  Another  East-End  Borough, 
Poplar,  expended  many  thousands  of  pounds  in 
tearing  up  good  macadamised  and  little-used  streets, 
and  relaying  them  with  stone  setts,  in  order  to  make 
work.  With  equal  reason  and  sense,  both  these 
local  authorities  might  have  sent  a  disorderly  mob 
down  the  main  streets  to  smash  shop-windows  in 
order  to  find  work  for  glaziers. 

From  an  examination  of  the  relief  schemes 
organised  under  the  Unemployed  Act  of  1905  we 
ought,  indeed,  to  learn  the  wisdom  dearly  bought 
of  experience.  That  Act  was  described  by  Mr.  John 
Burns,  the  President  of  the  Local  Government  Board, 
as  having  resulted  in  partial,  in  some  cases  com- 
plete, failure.  During  the  Parliamentary  debate  on 
the  Unemployed  Workmen  Bill  of  1908,  Mr.  Burns, 
speaking  in  opposition  to  the  measure,  stated  that 
the  kind  of  works  to  be  set  up  under  the  Bill  would 
be  works  precisely  similar  to  those  that  he  was  then 
administering,  and  to  which  he  was  "  banker,  clerk 
of  works,  and  foreman." 

"  What  kind  of  works  are  these  ?  I  will  take 
Hollesley   Bay,   which    is    an    exact    replica    of    the 

286 


The  Right  to  Work 

type  of  work  which  would  be  set  up  by  this  Bill. 
That  estate,  where  on  an  average  250  men  are  em- 
ployed every  day,  has  cost  the  Central  Unemployed 
Body,  in  less  than  three  years,  a  gross  sum  of 
;^ 1 00,000.^  Before  the  estate  became  a  public 
relief  works,  a  steward  with  eighteen  farm  hands 
was  able  to  make  a  small  profit  or  a  small  loss 
every  year.  Since  it  became  a  State  Relief  Works, 
with  250  men  engaged  on  it,  it  has  had  a  net  loss 
of  ;^2 1,000  a  year.  .  .  ."  In  all,  some  2500  men 
passed  through  the  colony.  Of  these,  148  emigrated, 
and  only  37  returned  to  the  land.  '<  The  labour 
and  the  work  of  these  men  is  brought  into  competition 
with  the  local  market  gardeners  and  farmers,  and 
when  I  go  down  to  Hollesley  Bay  I  am  confronted 
with  small  deputations  of  professional,  decent  agri- 
cultural labourers,  complaining  of  the  fact  that  our 
attempt,  well-intentioned,  charitably  inclined,  and  fed 
with  State  money,  is  dispossessing  the  decent  agricul- 
tural labourer. 

"  I  go  from  Hollesley  Bay  to  another  type  of  colony. 
I  take  South  Ockendon,  which  has  cost  up  to  this 
moment  -^22,000  for  purchase,  maintenance,  build- 
ings, and  so  forth,  and  it  has  an  average  daily 
attendance  of  seventy  men.  What  are  the  facts, 
and  I  put  them  as  charitably  as  one  can  ?  Seven 
hundred  and  ninety  men  have  passed  through  that 
colony  at  a  cost  per  week  per  man  of  anything 
between  30s.  and  32s.,  including  the  allowance  to 
the  family,  and  in  the  whole  time  that  that  colony 
has  been  in  operation — and  no  one  will  but  admit 
that  I  have  given  it  the  most  generous  and  fatherly 

*  The  purchase  money  was  ;^43,7oo  ;  gross  cost  of  management,  ^{^62,000. 

287 


Socialism  in  Local  Government 

assistance — out  of  the  790  which  have  gone  through 
that  colony — its  object  being  to  train  men  for  the 
land,  to  take  them  back  to  the  land — there  is  not 
a  recorded  instance  of  the  men  going  back  to 
agricultural  work.  .  .  .  The  average  cost  per  man 
per  week  is  just  double  the  rate  of  wages  paid  to 
the  agricultural  labourer  in  the  district. 

"  I  come  to  my  third  illustration.  I  will  take 
the  rural  workhouse  called  Laindon.  Laindon  has 
cost  to  this  moment  in  round  figures  for  cost  and 
maintenance  ^^20,000  ;  and  it  extends  to  100  acres, 
and  has  an  average  of  140  men  engaged  upon  it. 
Laindon  is  a  type  of  the  thing  we  should  come  to 
if  we  had  penal  colonies.  I  went  there  and  saw 
an  old  agricultural  labourer,  between  sixty  and  sixty- 
five  years  old,  digging  in  a  field  within  200  yards 
of  it,  getting  15s.  or  i6s.  per  week.  1  said  to  him, 
'  How  long  does  it  take  you  to  dig  an  acre  of 
land  ? '  He  said,  '  It  takes  me  a  fortnight  to  dig 
an  acre  of  that  land.'  I  went  across  the  rail  and 
found  on  the  public  works  sixty-seven  able-bodied 
men  under  conditions  approximating  to  a  penal 
colony  similar  to  those  under  right-to- work  conditions, 
taking  ten  days  to  dig  an  acre  and  a  half."  ^ 

The  President  of  the  Local  Government  Board 
further  stated  that  the  facts  he  had  given  were 
equally  applicable  "to  experiments  like  Hadleigh, 
Murieston,  and  Star  nth  waite."  Referring  to  another 
type  of  relief  works — the  women's  workshop  at 
Poplar — Mr.  Burns  asserted  "that  ^^1514  has  been 
paid  for  clothes  made  by  women  employed  at  these 
relief  works,  which  could  be  got,  better  in  cut  and 

^  Hansard,  March  13,  1908. 
288 


The  Right  to  Work 

style,  and  probably  in  quality,  for  £()g^.  Moreover, 
in  the  reports  from  East  End  Boards  of  Guardians 
it  is  pointed  out  that  this  work  displaces  professional 
women  who  have  been  hitherto  doing  it." 

Reviewing  the  total  result  of  the  experience 
gained  from  the  administration  of  the  Act  of  1905, 
Mr.  Burns  stated  that  "  all  the  distress  committees 
throughout  the  country,  including  the  Central  Un- 
employed Body,  are  agreed  that  relief  works,  whether 
carried  out  by  philanthropic  efforts  or  by  public 
authorities,  do  the  workmen  more  harm  than  good, 
and  perpetuate  and  stereotype  in  industrial  society 
the  very  chaos  they  are  supposed  to  remove." 

With  regard  to  the  proposal  to  pay  standard  wages 
to  every  unemployed  man  and  woman,  Mr.  Burns 
drew  a  convincing  picture  of  the  economic  cataclysm 
which  would  be  brought  about  by  the  Bill : — 

"  This  Bill  demands  the  compulsory  right  to  work. 
Under  this  Bill  every  local  authority  is  to  be  com- 
pelled to  employ  every  unemployed  man  and  woman 
according  to  their  capacity  at  trade  union  or  standard 
rates  of  wages,  and  in  the  event  of  its  being  unable 
to  provide  such  work,  there  is  to  be  maintenance. 
What  is  to  be  this  maintenance  in  the  absence  of 
work  ?  Is  it  to  cost  24s.  per  week  as  at  the  Laindon 
rural  workhouse,  or  30s.  as  at  Hollesley  Bay  and 
South  Ockendon  ?  We  all  know,  as  practical  men, 
that  if  once  we  concede  the  principle  of  the  Bill,  we 
shall  have  the  lanes  of  our  country  districts  black 
with  men,  no  longer  content  to  receive  15s.  to  i8s. 
a  week,  coming  into  our  towns  and  cities  where  the 
minimum  rate  will  be  28s.  or  30s.;  and  thus  we 
shall  reach  this  condition  of  things,  that  the  last  lot 

289  T 


Socialism  in  Local  Government 

of  the  poor  in  our  cities  will  be  infinitely  worse  than 
the  first. 

"  I  will  give  the  House  a  practical  illustration. 
What  will  become  of  the  riverside  labourers  and  the 
casual  dock  labourers  if  this  Right  to  Work  Bill  is 
passed  ?  Their  ranks  will  be  increased  by  the  allur- 
ing temptation  that  the  Bill  will  hold  out,  not  only 
to  men  who  are  unemployed,  but  also  to  men  who 
are  in  work  in  country  districts  at  lower  than  the 
guaranteed  standard  rates  in  the  towns  under  this 
Bill.  In  connection  with  the  existing  relief  works, 
there  are  cases  in  which  men  have  left  their  ordi- 
nary work,  where  they  have  to  give  full  measure,  and 
sometimes  overflowing  measure,  to  engage  in  country 
relief  works,  which  can  never  be  properly  organised 
or  profitably  carried  on  under  a  Bill  such  as  this. 
What  effect  will  the  Bill  have  on  the  unemployed  of 
all  trades  ?  .  ,  .  They  cannot  work  at  their  own  trade, 
because  it  does  not  afford  employment.  In  a  penal 
colony  there  is  market  gardening,  which  is  three 
times  more  unprofitable  than  free  competitive  work. 
The  only  trade  that  offers  employment  under  this 
Bill  is  the  building  trade.  That  is  the  trade  which 
is  always  most  fluctuating,  and  has  always  the  largest 
number  of  men  out  of  work.  It  is  the  building  trade 
that  will  have  to  absorb  the  residuum  of  the  un- 
employed of  every  other  trade,  and  the  result  will  be 
that  the  standard  of  efficiency  of  the  men  will  be 
reduced,  and  the  trade  will  be  damaged  in  every 
respect  by  the  building  trade  being  made  more 
casual  than   it  is.   .   .   . 

"  If  the  right  to  work  is  recognised,  and  every  navvy 
has  the  right  to  claim   work  or   maintenance,  then 

290 


The  Right  to  Work 

men  will  not  take  the  trouble  to  walk  from  job  to 
job,  from  railway  to  waterworks  ;  they  will  not  cross 
the  Channel  to  do  laborious  work  for  three  or  four 
months  in  one  year.  They  will  remain  in  their  own 
parishes,  and  when  they  are  out  of  work  they  will  go 
to  the  town-hall  and  register  their  names.  They  will 
consider  that  they  have  done  their  duty  in  looking 
for  work  when  they  have  registered  themselves  at 
the  labour  bureau,  especially  when  maintenance 
rewards  their  indisposition  to   look  for  work." 

From  these  actual  experiences,  and  from  the  pro- 
bable results  of  such  schemes  established  to  relieve 
the  unemployed,  we  can  form  some  idea  of  the 
grave  disaster  that  would  ensue  from  any  attempt 
to  generally  recognise  the  "  right  to  work."  Were 
such  a  right  placed  upon  the  Statute  Book,  the  local 
authorities,  or  the  Central  Government  itself,  might 
find  themselves  committed  to  provide  work  for 
millions  of  persons.  That  would  entail  the  levying 
of  heavy  rates  and  the  raising  of  huge  loans  by 
municipalities  to  "  organise  and  undertake  such  in- 
dustries "  not  "  as  they  might  consider  desirable," 
but  as  they  were  forced  by  the  exigencies  of  the 
situation  to  adopt.  By  undertaking  the  organisation 
of  industry  to  meet  only  the  temporary  emergency 
of  seasonal  slackness  of  work,  a  huge  financial  loss 
would  be  entailed.  Then  would  follow,  in  the 
natural  course  of  events,  a  demand  for  continuous, 
and  not  merely  temporary,  municipal  action,  in 
order  to  secure  what  the  Labour  programme  calls 
"  remunerative  employment." 

Moreover,  as  we  have  seen,  the  right  to  labour 
"  necessarily  implies  employment    at   current  wages 

291 


Socialism  in  Local  Government 

and  in  the  various  trades  to  which  the  unemployed 
belong."  The  bricklayer  and  carpenter  must  be 
engaged  in  building,  the  watchmaker  in  making 
watches,  the  clerk  in  clerical  work,  and  the  engineer 
in  engineering.  In  fact,  there  is  not  any  stopping 
point  short  of  full  recognition  of  the  demand  made 
by  Proudhon  in  his  Le  Droit  au  Travail  et  le  Droit  dc 
Propriete : — 

"The  right  to  labour  is  the  right  which  every 
citizen,  whatever  be  his  trade  or  profession,  has  to 
constant  employment  therein,  at  a  wage  fixed  not 
arbitrarily  or  at  hazard,  but  according  to  the  actual 
and  normal  rate  of  wages." 

By  this  means,  the  full  Socialist  State  would  be 
reahsed.  All  freedom  of  trade  and  competition 
would  have  to  be  abolished  ;  the  State  ownership 
and  management  of  the  means  of  production,  dis- 
tribution, and  exchange  would  be  established  ;  all 
labour  would  be  State  labour. 

So  far  we  have  only  considered  the  attempt  which 
is  now  being  made  to  establish  "  The  Right  to  Work  " 
as  part  of  the  law  of  Great  Britain.  It  is,  however, 
both  interesting  and  instructive  to  notice  the  disastrous 
experiment  which  was  tried  in  France,  and  which 
nearly  brought  about  the  downfall  of  the  French 
Republic  of  1848.  With  the  overthrow  of  the 
Monarchy,  France  found  itself  under  a  provisional 
government  composed  of  three  parties — the  Liberal 
Party  ;  the  Socialist  Party,  comprising  various  sections, 
each  advocating  the  reconstruction  of  Society  on 
different  Socialistic  lines,  the  most  popular  being 
"the  reorganisation  of  labour";    the  Revolutionary 

292 


The  Right  to  Work 

Party,  with  no  ideals  at  all  except  riot,  and  consisting 
of  the  disorderly  and  criminal  classes,  who  are  always 
opposed  to  any  form  of  government. 

In  his  History  of  the  National  WorksJiops,  M.  Emile 
Thomas  gives  a  vivid  picture  of  the  rise  and  fall  of 
the  State  workshops.  The  new  Republican  Govern- 
ment, under  Socialistic  influence,  and  ruled  by  the 
labouring  classes  of  the  capital,  on  February  25, 
1848,  issued  a  decree,  drawn  up  by  Louis  Blanc, 
and  hurriedly  passed  by  the  Government,  to  the 
following  effect : — 

"The  Provisional  Government  of  the  French 
Republic  engages  to  guarantee  the  existence  of  the 
workmen  by  labour.  It  engages  to  guarantee  work 
to  all  citizens  ;  it  recognises  that  the  workmen  ought 
to  form  associations  in  order  to  enjoy  the  legitimate 
reward  of  their  labour." 

This  was  followed  by  a  further  decree  for  the 
"  immediate  establishment  of  national  workshops." 
M.  Emile  Thomas  was  entrusted  with  the  organisa- 
tion of  the  unemployed  on  lines  similar  to  those  laid 
down  by  Saint-Simon,  who  died  in  1825,  and  who 
was  one  of  the  founders  of  SociaHsm.  His  plan  was 
that  the  State  should  own  the  means  of  production 
and  organise  industry  on  the  line  of  the  maxim, 
"To  each  according  to  his  capacity,  and  to  each 
capacity  according  to  its  works."  Establishing  his 
headquarters  in  the  Pare  Monceaux,  M.  Thomas 
began  his  task  of  organising  the  Parisian  ''  out-of- 
works  "  without  delay.  At  a  conference  with  the 
Mayors  of  the  various  wards  of  Paris,  the  young 
disciple  of  Saint-Simon  enunciated  his  plans,  and 
promised  to  be  ready  in  a  few  days  to  enrol  the  first 

293 


Socialism  in  Local  Government 

lot  of  three  thousand  men  from  a  certain  distressful 
district,  the  other  parts  of  the  town  to  be  dealt  with 
on  successive  days.  Naturally,  industry  was  stagnant, 
or  only  feebly  active,  in  the  storm  and  stress  of  revolt, 
and  apart  from  the  powerful  Socialist  army  of  artisans, 
who  wished  for  State  industries,  there  were  many 
thousands  of  unemployed  who  held  no  views  at  all, 
and  only  wanted  work.  The  pupils  of  the  Central 
School  of  Engineering,  who  held  the  favour  of  the 
multitude,  were  to  maintain  discipline,  mainly  by 
moral  example.  The  unit  of  organisation  was  a 
section  of  eleven  men  under  a  chief,  "  then  came 
the  brigade  of  five  sections  under  a  brigadier,"  and 
so  on.  We  are  told  that  the  rates  of  pay  were  low, 
the  workers  receiving  2  francs  on  days  of  activity, 
that  is  to  say  when  any  work  was  done  ;  and  i^ 
francs  when  work  was  not  available.  The  officers  or 
supervisors  were  paid  a  little  more.  One  of  the  first 
works  undertaken  was  simple  enough.  It  was  to 
remove  the  remains  of  the  trees  destroyed  during 
the  street  fighting,  and  to  plant  fresh  ones.  This 
work  only  entailed  the  labour  of  a  few  hundred  men, 
and  the  remainder  were  sent  on  foot  to  fetch  tools 
from  the  forts  around  Paris,  and  to  procure  trees 
from  distant  nurseries.  As  M.  Thomas  admitted, 
"  This  method  of  transport  was  at  once  absurd  and 
ruinous,  but  what  did  the  loss  of  a  few  hundred 
francs  matter  in  comparison  with  the  bad  example 
of  giving  a  subsidy  to  idlers  ?"  The  next  important 
event  was  the  arrival  of  another  1200  men,  most  of 
them  with  personal  recommendations  from  prominent 
politicians  asking  that  they  should  be  given  posts  as 
superintendents.       M.  Thomas  began  to  experience 

294 


The   Right  to  Work 

grave  difficulty  in  finding  work  for  his  brigades  of 
unemployed.  The  Ministry  of  Public  Works  was 
daily  appealed  to,  but  always  came  the  reply,  "  The 
engineers  have  found  no  jobs  yet."  The  Govern- 
ment dallied  with  various  schemes,  and  assented  to 
none.  The  result  was  that  the  "national  workers" 
became  daily  more  unruly,  troublesome,  and  un- 
productive. 

The  state  of  affairs  was  gravely  aggravated  by 
the  fact  that  not  only  did  the  unemployed  apply 
for  work,  but  also  all  those  who  had  chosen  to 
come  out  on  strike  for  higher  wages  and  better 
labour  conditions  ;  so  that  the  Provisional  Govern- 
ment was  providing  not  only  relief  but  strike  pay, 
and  discouraging  private  employers  in  their  efforts 
to  restore  commercial  confidence. 

In  less  than  a  fortnight  M.  Thomas  had  some 
14,000  men  unoccupied.  So  serious  was  the  con- 
dition of  affairs  that  the  Government  was  forced 
to  do  something  to  justify  its  decree  guaranteeing 
work  for  all  citizens.  The  Ministry  of  Public  Works 
was  accordingly  instructed  to  set  the  Government 
engineers  the  task  of  starting  artificial  works,  and 
various  schemes  of  road-making  and  levelling  were 
adopted.  This  gave  employment  to  the  majority 
of  the  men  already  enrolled. 

It  is  to  be  observed  that  no  general  effort  was 
made  to  organise  the  various  industries,  though 
Louis  Blanc  started  Government  workshops  to 
supply  army  clothing  and  equipment. 

The  Economist  of  May  20,  1848,  thus  describes  this 
experiment,  which  began  with  peculiar  advantages  : — 

"  The    Government    made   the    buildings   suitable 

295 


Socialism  in  Local  Government 

for  the  purpose  without  rent  or  charge  ;  furnished 
the  capital,  without  interest,  necessary  to  put  it 
into  immediate  and  full  operation,  and  gave  an 
order  to  commence  with  for  25,000  suits  for  the 
National  Guard,  to  be  followed  by  more  for  the 
Garde  Mobile,  and  then  for  the  regular  troops. 
The  first  step  taken  was  to  ascertain  at  what  cost 
for  workmanship  the  large  tailors  of  Paris,  who 
ordinarily  employed  the  bulk  of  the  workmen,  and 
performed  Government  contracts,  would  undertake 
the  orders.  Eleven  francs  for  each  dress  was  the 
contract  price,  including  the  profit  of  the  master 
tailor,  the  remuneration  for  his  workshop  and  tools, 
and  for  the  interest  of  his  capital.  The  Government 
agreed  to  give  the  organised  tailors  at  the  Hotel 
Clichy  the  same  price.  Fifteen  hundred  men  were 
quickly  got  together,  with  an  establishment  of  fore- 
men, clerks,  and  cutters-out.  It  was  agreed  that 
inasmuch  as  the  establishment  possessed  no  capital 
to  pay  the  workmen  while  the  order  was  in  course 
of  completion,  the  Government  should  advance 
every  day,  in  anticipation  of  the  ultimate  payment, 
a  sum  equal  to  two  francs  (is.  yd.)  for  each  man 
in  the  establishment,  as  'subsistence  money';  that 
when  the  contract  was  completed  the  balance  should 
be  paid  and  equally  divided  amongst  the  men. 
Such  fair  promises  soon  attracted  a  full  shop  ;  and 
when  we  visited  the  Hotel  Clichy  upwards  of 
1500  men  were  at  work,  and  apparently  were  not 
only  steady,  but  industrious.  The  character  of 
the  work  they  were  upon  at  the  time,  the  urgency 
of  the  ragged  Garde  Mobile  for  their  uniforms, 
formed     an     unusual     incentive     to     exertion  ;     the 

296 


The  Right  to  Work 

foreman  told  us  that  notwithstanding  the  law 
limiting  the  hours  of  labour  to  ten,  the  '  glory, 
love,  and  fraternity '  principle  was  so  strong  that 
the  tailors  voluntarily  worked  twelve  or  thirteen 
hours  a  day,  and  the  same  even  on  Sundays  ;  they 
seemed  to  forget  the  stimulus  of  the  expected 
balance  which  each  was  to  receive  at  the  con- 
clusion of  the  contract. 

"  What  was  the  result  ?  For  some  time  many 
contradictory  statements  were  put  forward  by  the 
friends  and  opponents  of  the  system,  Louis  Blanc 
looked  upon  it  as  the  beginning  of  a  new  day 
for  France.  He  had  already  arranged  that  as 
the  tailors  were  the  first  to  begin,  the  cabinet- 
makers should  next  be  organised,  and  one  by 
one  all  the  trades  of  France.  He  forgot  that  he 
would  not  have  an  order  for  the  cabinetmakers 
to  furnish  half  the  houses  in  Paris  to  begin  with  ; 
this,  in  his  estimation,  was  no  difBculty.  He  had 
in  view  public  warehouses  for  the  sale  of  furniture ; 
and  although  not  a  chair  or  table  had  been  sold 
in  the  existing  overstocked  shops  for  two  months, 
he  had  no  doubt  about  customers.  But  the  result 
of  the  experiment  in  the  Hotel  Clichy  had  been 
fatal.  The  first  order  was  completed  ;  each  man 
looked  for  his  share  of  the  gain.  The  riches  of 
Communism,  and  the  participation  in  the  profits, 
dazzled  the  views  of  the  1500  tailors,  who  had 
been  content  to  receive  is.  yd.  per  day  as  sub- 
sistence money  for  many  weeks  ;  no  doubt  every 
one  in  his  own  mind  appropriated  his  share  of  the 
'  balance  '  ;  for  once  he  felt  in  his  own  person  the 
combined    pleasure     of    '  master    and    man.'      The 

297 


Socialism  in  Local  Government 

accounts    were   squared.       Eleven   francs    per  dress 
for  so  many  dresses  came  to  so  much.     The  sub- 
sistence money  at  is.  yd.  a  day  had  to  be  deducted. 
The    balance   was    to    be   divided   as    profit.     Alas  1 
it  was  a  balance  of  loss  not  gain  ;   subsistence  money 
had  been  paid  equal  to  rather  more,  when  it  came 
to  be   calculated,  than  sixteen  francs  for  each  dress, 
in  place  of  eleven,  at  which  the  master  tailor  would 
have    made    a   profit,   paid  his   rent,  the  interest  of 
his  capital,   and  good  wages  to    his   men,   in    place 
of  a  daily  pittance  for  bare   subsistence.     The  dis- 
appointment   was    great    when    no   balance    was   to 
be  divided.     The  consternation  and  disturbance  was 
greater  when  a  large  loss   was  to   be  discussed,  for 
which    no    provision    in   the   plans   had  been   made. 
The   customers — that  is,  the    New  National    Guard 
and     the    Garde    Mobile — were     in    a    rage    at   the 
detention    of    their    uniforms,    and    the    whole    at- 
tempt   seems    to    have    resulted    in    confusion    and 
disappointment."  ^ 

Of  course  the  reason  of  this  failure  is  obvious. 
Each  worker  felt  that  the  product  of  any  extra  effort 
on  his  part  would  have  to  be  shared  among  all  the 
workmen  instead  of  being  enjoyed  by  himself  alone. 
Therefore,  there  was  a  general  decrease  in  exertion, 
and  not  all  the  enthusiasm  for  the  "  organisation  of 
labour"  could  avert  a  loss.  No  doubt  this  failure 
to  fit  every  man  with  his  proper  work  caused  much 
discontent,  which  was  increased  by  the  growing 
numbers  of  unemployed  who  continued  to  flock  to 
Paris  after  having  left  their  situations  in  the  sur- 
rounding   districts.     At    a   very    early    stage   of   the 

1  The  Economist,  20th  May,  1848. 
298 


The   Right  to  Work 

experiment  it  was  found  that  many  of  the  "  citizens  " 
were  not  anxious  to  work.  They  were  not  animated 
by  any  desire  to  contribute  to  the  general  welfare  of 
the  community.  Their  motto  was,  "  A  maximum  of 
pay  for  a  minimum  of  work."  In  fact,  they  chose 
rather  to  take  ij  francs  a  day  for  doing  nothing 
than  2  francs  for  hard,  unskilled  work.  Therefore, 
the  pay  for  a  day's  idleness  was  reduced  to  i  franc, 
but  without  effect,  for  the  "  brigades  "  of  citizens  in 
search  of  work  grew  to  an  inordinate  extent.  The 
administration  was  bad,  and  supervision  became 
almost  a  dead  letter.  Men  drew  their  i  franc  a 
day  as  unemployed  though  they  were  in  ordinary 
employment.  It  is  interesting  to  notice  that  this 
same  trick  was  very  prevalent  in  Poplar  in  recent 
years  under  a  badly  administered  system  of  outdoor 
relief.  Men  in  receipt  of  aid  from  the  Poor  Law 
authorities  were  at  the  same  time  in  regular  or 
intermittent  employment — the  latter  being  a  matter 
of  discretion.  To  return  to  Paris  and  '48 — other 
men  enlisted  in  several  brigades,  and  drew  pay  from 
all  of  them.  These  frauds,  difficult  enough  to  detect 
by  an  expert  staff,  were  never  checked  by  the  army 
of  officials  at  headquarters,  who,  as  M.  Thomas 
complains,  had  been  appointed  on  political  recom- 
mendation. It  is  recorded  that  every  single  member 
of  the  Provisional  Government  had  his  nominees. 
One  member  sent  no  less  than  700  applicants.  In 
fact,  M.  Thomas  states  that  the  national  workshops 
were  regarded  by  the  Ministry  as  a  sort  of  drain  to 
draw  off  from  the  politicians  the  clamouring  mass  of 
place-hunters  and  political  parasites. 

To  show  the  extraordinary  demands  made  upon 

299 


Socialism  in  Local  Government 

his  department,  M.  Thomas  gives  an  account  of  an 
order  sent  to  him  from  the  Ministry  of  PubHc  Works 
requesting  him  to  deal  at  once  with  all  the  claims  of 
six  hundred  persons,  mainly  dramatic  artists,  painters, 
sculptors,  designers,  bank-clerks,  and  shop  assistants. 
This  batch  of  claimants  had  addressed  to  the  Ministry 
the  following  powerful  plea  : — 

''The  Republic  has  guaranteed  work  to  every 
citizen.  We  have  none.  We  do  not  ask  that  work 
should  be  given  to  us,  as  was  promised,  each  in 
our  own  occupation.  We  know  that  this  would  be 
impossible.  But  at  least  give  us  the  opportunity  of 
honourably  earning  the  bread  we  need.  We  are  at 
the  end  of  our  resources,  and  the  municipal  autho- 
rities refuse  to  give  us  tickets  of  admission  to  the 
national  workshops  because  we  wear  the  clothes  to 
which  we  have  been  accustomed  and  not  the  dress 
of  workmen.  Yet  we  are  worthy  of  pity  as  well 
as  they." 

With  a  wonderful  disregard  of  financial  con- 
siderations, M,  Thomas  set  the  whole  600  to  act 
as  inspectors  of  pay  sheets,  and  as  visitors  of  the 
workmen  in  their  homes  in  order  to  report  upon 
their  physical  and  moral  condition. 

So  matters  proceeded  from  bad  to  worse,  until 
by  the  end  of  April  the  army  of  men  claiming  the 
"  right  to  labour  "  had  reached  the  enormous  figure 
of  over  100,000,  though  generally  there  was  not  the 
slightest  pretence  of  working,  and  only  12,000  at 
most  could  be  found  work  of  an  unproductive  nature. 
Accordingly  the  "national  workmen"  were  harangued 
by  a  Minister  who  laid  stress  upon  the  duty  of  work- 
ing, and  thereby  provoked  murmurs  of  disapproval. 

300 


The   Right  to  Work 

As  might  have  been  foreseen,  the  drain  upon  the 
national  treasury  caused  by  the  maintenance  of  "the 
national  workmen  "  became  almost  unbearable.  The 
idle  masses  of  workmen  were  regarded  with  hostility 
by  the  Parisians.  The  National  Assembly  which  had 
in  the  meantime  been  elected  by  the  whole  country 
was  less  susceptible  to  Socialistic  ideas  than  their 
forerunners  —  the  Provisional  Government.  The 
constant  demands  for  fresh  subsidies  called  forth 
growing  protests.  "The  monster  of  democratic 
Socialism,"  as  Proudhon  called  it,  threatened  to  bank- 
rupt France.  M.  Trelat,  the  Minister  of  Public 
Works,  tried  to  formulate  a  scheme  for  the  gradual 
reduction  of  the  national  workshops  by  drafting  the 
men,  as  occasion  presented,  to  private  and  public 
works.  Sedition  crept  into  the  ranks  of  "  organised 
labour."  Threats  were  offered  to  the  Government, 
and  ultimately  M,  Thomas  was  arrested  and  taken 
under  police  escort  to  Bordeaux.  Preparations  were 
made  by  the  Government  to  meet  the  conflict  now 
deemed  to  be  inevitable.  A  strong  force  was  gathered 
together  at  various  points.  An  order  was  issued  on 
June  22nd,  offering  service  in  the  army  to  bachelors 
between  the  ages  of  eighteen  and  twenty-five  ;  invi- 
tations were  sent  to  private  employers  to  apply  for 
workmen  ;  dismissal  was  the  fate  of  all  national 
workmen  who  refused  offers  ;  the  remainder  was  to 
be  drafted  on  to  works  in  the  provinces.  A  depu- 
tation of  workmen  to  the  Assembly  was  answered  by 
the  threat,  "  If  the  labourers  do  not  voluntarily  sub- 
mit to  the  decree  they  will  be  expelled  by  force  from 
Paris."  This  was  the  signal  for  revolt.  The  army 
of  workmen,  organised  in  brigades,  erected  barricades, 

301 


Socialism  in  Local  Government 

and  after  a  four  days'  battle  in  which  900  troops 
were  killed  and  some  2000  wounded,  the  "national 
workmen  "  were  utterly  routed  with  unknown  losses. 
Nearly  4000  workmen  were  transported  to  Algeria. 
Thus  ended  the  State  recognition  of  the  ''right  to 
labour"  by  the  French  Republic  of  1848. 

The  main  proposal  embodied  in  the  Right  to  Work 
Bill  promoted  by  the  Independent  Labour  Party  is 
practically  on  the  same  line  as  that  adopted  with 
such  disastrous  results  in  Paris  during  1848.  And 
while  the  more  sober  temperament  of  the  Briton 
would  doubtless  save  us  from  the  worst  excesses 
of  the  French  experiment,  a  like  attempt  in  this 
country  would  involve  us  in  a  dreadful  economic 
catastrophe,  frightful  social  disorder,  and  suffering. 
The  sorry  results  of  the  few  scattered  experiments  of 
labour  colonies  already  related  should  serve  as  a 
warning  against  the  larger  schemes  which  Adminis- 
trative Socialism  advocates. 

It  is  important  to  note  that  in  1893  the  Socialist 
Party  in  Switzerland  made  a  similar  proposal. 
Having  secured  the  necessary  50,000  signatures, 
the  clause  was  submitted  to  a  vote  of  the  whole 
people.  The  clause  read  :  ''  The  right  to  sufficiently 
paid  labour  is  guaranteed  to  every  Swiss  citizen. 
The  Federal  Legislature,  in  co-operation  with  the 
cantons  and  communes,  will  give  practical  effect 
to  this  principle  in  every  possible  way."  At  the 
voting  in  June,  1894,  the  proposed  "right  to  work" 
was  defeated  by  308,289  votes  to  75,880. 

It  would  appear,  then,  that  we  must  unhesitatingly 
reject  the  Socialist  doctrine  of  "  The  Right  to  Work." 

302 


The  Right  to  Work 

It  provides  no  solution  of  the  unemployed  problem. 
We  must  continue  to  walk  with  prudence  the  old 
road  of  experience,  and  not  seek  to  solve  our  diffi- 
culty by  giving  "  out-of-works "  employment  of  a 
kind  which  no  one  wants,  at  the  expense  of  those 
in  work.  The  governmental  distribution  of  capital 
in  the  payment  of  labour  which  makes  no  adequate 
or  equal  return,  spells  economic  ruin.  To  prevent 
irregular  work  we  must  look  to  the  better  organisa- 
tion of  industry  by  those  engaged  in  it.  The  appli- 
cation of  registration  methods  to  seasonal  trades 
might  well  save  an  undue  influx  of  unskilled  labour 
into  particular  trades.  If  firms  and  employers  in  sea- 
sonal trades  could  be  induced  to  co-operate  with  the 
various  Labour  Bureaux  in  devising  some  scheme 
for  registering  the  labourers  engaged  in  those  trades, 
and  for  a  systematic  transfer  from  one  trade  to 
another  as  occasion  and  demand  arose,  a  long  step 
would  be  taken  towards  removal  of  the  curse  of 
intermittent,  casual  labour. 

It  is  true,  too,  to  say  that  there  is  good  cause  for 
believing  that  the  unemployed  question  is  becoming 
less  acute  than  it  was.  There  is  "  no  good  reason 
for  thinking  that  inconstancy  of  employment  is 
increasing  on  the  whole."  ^ 

"  In  the  long  run  every  branch  of  industry  would 
prosper  better,  if  each  exerted  itself  more  strenuously 
to  set  up  several  standards  of  efficiency  for  labour, 
with  corresponding  standards  for  wages  ;  and  were 
more  quick  to  consent  to  some  relaxation  of  a  high 
standard  of  money  wages  when  the  crest  of  a  wave 
of  high  prices,  to  which  it  was  adapted,  had  passed 

^  Marshall's  Principles  of  Economics. 


Socialism  in  Local  Government 

away.  Such  adjustments  are  full  of  difficulty  ;  but 
progress  toward  them  might  be  hastened  if  there 
were  a  more  general  and  clear  appreciation  of  the 
fact  that  high  wages,  gained  by  means  that  hinder 
production  in  any  branch  of  industry,  necessarily 
increases  unemployment  in  other  branches.  For, 
indeed,  the  only  effective  remedy  for  unemployment 
is  a  continuous  adjustment  of  means  to  ends,  in  such 
a  way  that  credit  can  be  based  on  the  solid  founda- 
tion of  fairly  accurate  forecasts  ;  and  that  reckless 
inflations  of  credit — the  chief  cause  of  all  economic 
malaise — may  be  kept  within  narrower  limits."  ^ 

The  solution  of  the  question  lies  not  in  the  power 
of  any  Government,  but  in  the  organisation  and 
foresight  of  each  individual  industry.  Judgment  as 
to  the  national  and  international  demands  for  the 
products  of  each  trade  must  rest  with  the  captains 
of  industry,  assisted  by  a  competent  Board  of  Trade, 
and  on  their  skill  depends  the  steadiness  or  unsteadi- 
ness of  employment. 

A  Ihundred  methods  of  alleviation  are  available, 
and  the  most  promising  one  is  provision  on  the  part 
of  the  workman  against  the  day  when  work  is  not 
procurable.  There  may  yet  be  evolved  some  kind 
of  voluntary  insurance  scheme,  which  will  afford  a 
means  of  "  tiding-over  "  the  enforced  "  days  of  rest." 

^  Marshall's  Principles  of  Economics. 


304 


XIX 

MUNICIPALISATION    OF  THE 
"DRINK   TRAFFIC" 

Not  the  least  important  item  in  the  programme  of 
the  Administrative  SociaHst,  and  one  which  he  deems 
to  be  now  well  within  the  range  of  practical  poHtics, 
is  the  municipaHsation  of  the  drink  traffic. 

Strangely  enough,  though  the  point  has  often  been 
discussed,  local  authorities  have  never  been  invested 
with  power  to  either  grant  public -house  licenses, 
or  to  control  and  regulate  the  sale  of  intoxicating 
liquors.  As  far  back  as  1835,  when  introducing  the 
Municipal  Corporations  Bill,  Lord  John  Russell  pro- 
posed that  the  power  of  granting  ale-house  licenses 
"  should  be  left  to  the  Council,  or  a  Committee  of 
the  Council."  Nothing,  however,  was  done  to  carry 
out  the  proposal. 

Thirty  years  later,  Mr.  Joseph  Chamberlain  placed 
before  a  Committee  of  the  House  of  Lords  a  scheme 
for  municipalisation  of  the  drink  trade  in  Birming- 
ham. So  successful  was  his  advocacy  of  the  proposal 
that  the  Committee  reported  to  Parliament  in  favour 
of  it.  And  it  is  to  be  observed  that  one  of  the  reasons 
advanced  in  support  of  the  scheme  was  that  it  pro- 
vided "  relief,  directly  and  indirectly,  of  the  rates." 

305  u 


Socialism  in  Local  Government 

Parliament,  however,  was  not  convinced  of  the 
wisdom  of  Mr.  Chamberlain's  idea,  and  a  general 
resolution  stating  that  it  was  desirable  "  to  empower 
Town  Councils  of  Boroughs  under  the  Municipal 
Corporations  Acts  to  acquire  compulsorily  on  pay- 
ment of  fair  compensation  the  existing  interests  "  was 
defeated  in  the  House  of  Commons  by  52  votes. 

Municipalisation  is  now  strenuously  supported  both 
by  the  Fabian  Society  and  by  the  Independent 
Labour  Party.  According  to  Mr.  Philip  Snowden, 
M.P.,  it  "is  frankly  based  on  the  admission  that  the 
public-house  is  a  public  convenience  which  the  public 
will  have.  It  is  recognised  that  the  trade  is  one 
which,  unless  strictly  controlled,  may  lead  to  serious 
evils,  but  if  the  sale  of  drink  be  conducted  under 
proper  safeguards,  then  it  meets  what  public  opinion 
considers  (whatever  individual  opinion  may  be)  a 
perfectly  legitimate  desire.  The  idea  of  municipali- 
sation, then,  is  to  provide  for  the  satisfaction  of  .a 
reasonable  indulgence  in  drink,  but  to  prevent  the 
abuse  of  it." 

Naturally,  every  local  authority  is  to  produce  its 
own  beer  and  spirits.  The  municipal  brewery  and 
distillery  will  flourish.  ''  I  rather  like  to  think," 
says  Mr.  H.  G.  Wells,  "of  the  red  dagger  of  London 
on  the  wholesome  bottled  ales  of  her  great  (munici- 
palised) breweries." 

Of  course,  the  general  arguments  for  and  against 
municipal  trading  also  apply  to  the  municipal 
ownership  and  management  of  the  drink  traffic. 
It  is  claimed  by  the  Socialist  that,  notwithstanding 
numerous  attempts  to  regulate  the  trade  and  to  pre- 
vent abuses,  there  has  been  no  real  reform.     To  this 

306 


Municipalisation   of  ''  Drink  Traffic  " 

contention  the  obvious  answer  is  the  immense  de- 
crease in  the  drinking  habits  of  the  people  in  the 
last  twenty  years,  due  to  education  and  State  regula- 
tion. The  Licensing  Act  of  1904  provided  a  sound 
system  for  reducing  the  number  of  licenses.  Before 
the  Act,  the  average  annual  net  reduction  of  licenses 
was  386  ;  since  the  Act,  the  average  annual  net  re- 
duction has  been  1473.  This  reduction  has  been 
made  without  any  expense  to  the  public. 

The  measure  now  under  consideration  in  the  pre- 
sent Session  of  Parliament  threatens  not  merely  a 
systematic  reduction  in  the  number  of  licenses,  but 
the  imposition  of  a  time  limit,  at  the  expiry  of  which 
every  then  existing  license  lapses. 

It  is  to  be  observed  that  the  Socialist  sees  some 
difficulty  in  municipalisation  during  the  working  of 
the  time  limit  ;  but  in  view  of  the  fact  that  the  public 
would  need  to  have  full  information  and  experience 
when  "  called  upon  at  the  end  of  the  time  limit  to 
decide  the  further  method  of  control,  it  would  be 
invaluable  if,  in  the  meantime,  we  could  have  one  or 
two  enterprising  and  competent  local  authorities  try 
experiments  in  complete  municipal  control.  It  would 
be  essential  that  the  municipality  have  a  complete 
monopoly  of  the  retail  sale  in  its  area  ;  a  municipal 
public-house,  surrounded  by  others  in  private  hands, 
is  useless  for  forming  conclusions."  ^  This  suggested 
experiment  is  to  be  made  by  commutation  of  the 
unexpired  value  of  the  licenses,  after  a  vote  of  the 
inhabitants  of  a  district  has  been  taken. 

When  all  licenses  lapse  at  the  expiry  of  the  time  limit, 
then  the   inhabitants  of  a  district  are  to   determine 

^  P.  Snowden,  M.P.,  in  Soiux/isiu  and  the  Drink  Question,  p.  173. 


Socialism  in  Local  Government 

"  the  extent  and  method  of  control  of  the  future 
traffic."  Parliament,  however,  ought  not  to  "  impose 
upon  every  locality  the  obligation  to  municipalise 
the  retail  traffic."  There  should  be  a  power  of 
option,  and  "  a  very  decisive  vote  "  in  favour  ought  to 
be  obtained  before  municipalisation  is  undertaken. 

The  most  important  point,  and  one  which  bristles 
with  difficulty  from  the  Socialist  point  of  view,  is 
the  question  of  the  constitution  of  the  local  autho- 
rity to  manage  the  liquor  traffic.  A  specially  con- 
stituted authority  would  result  in  elections  to  it 
being  fought  "  between  fanatical  teetotallers  and 
the   publicans," 

The  Council,  says  Mr.  Snowden,  is  the  proper 
authority  to  undertake  the  work,  and  as  its  duties 
are  so  varied,  and  the  interests  of  the  citizens  who 
elect  the  Councils  so  diverse,  the  drink  question 
would  only  be  one  of  the  influences  deciding  the 
question.  Nevertheless,  no  one  can  contemplate 
the  large  part  played  by  the  liquor  interest  in  muni- 
cipal elections  in  the  United  States,  particularly  in 
New  York,  without  coming  to  the  conclusion  that 
to  throw  the  control  and  management  of  the  drink 
trade  into  the  arena  of  local  politics  would  irretriev- 
ably damage  British  local  government. 

The  Fabian  Society  do  not  attempt  to  disguise 
this  disagreeable  feature.  "  The  liquor  issue  will 
too  often  be  an  all-powerful  one  in  determining 
the  election  of  councillors.  The  time-honoured  dis- 
tinctions between  Liberal  and  Tory,  Progressive  and 
Moderate,  will  sink  out  of  sight.  Past  services  will 
be  forgotten ;  promissory  programmes  will  attract 
no  votes ;  elections  from  Perth  to  Plymouth  will  be 

308 


Municipalisation  ot  "  Drink  Traffic  " 

fought  on  the  Publicans  versus  the  Temperance  Party 
ticket."  1 

Curiously  enough,  Mr.  Snowden  is  apparently  an 
opponent  of  the  Fabian  scheme  of  indirectly  elected 
Provincial  and  National  Boards  for  the  purpose  of 
socialisation  of  everything.  Dealing  with  the  sug- 
gestion that  a  statutory  Committee  to  manage  the 
drink  traffic  might  be  formed,  with  liberty  to  co-opt 
outside  persons,  he  observes  that  "this  is  neither 
democratic  in  principle,  nor  calculated  to  secure 
that  efficiency  of  management  which  comes  from 
a  sense  of  direct  contact  with  the  electorate."  ^ 

This  piece  of  criticism,  however,  is  followed  by 
the  extraordinary  statement  that  the  "  tendency  of 
local  government  towards  the  unification  of  adminis- 
tration in  one  body  must  lead  to  a  large  increase 
in  the  membership  of  the  Councils,  and  the  en- 
trusting of  departments  of  work  to  the  Committees 
without  any  close  supervision  by  the  general  body. 
This  is  in  no  way  undesirable.  On  the  contrary,  it 
is  likely  to  conduce  to  more  effective  control,  as  the 
members  of  the  Councils,  restricted  to  one  or  a  very 
few  departments  of  public  work,  will  be  able  to  keep 
more  thoroughly  in  touch  with  the  work.  And  their 
direct  responsibility  to  the  electorate  will  be  in  no 
way  impaired."  ^ 

Surely  all  experience  proves  that  lack  of  close 
supervision  of  Committees  by  the  general  body  leads 
inevitably  to  waste,  extravagance,  and  corruption. 
If  each  Committee  of  a  Municipal  Council  is  to  be 
a  sort  of  ad  hoc  authority,  sitting,  moreover,  in  secret, 

^  Fabian  Tract,  No.  86,  p.  12. 
2  Page  175.  ^  Page  176. 

309 


Socialism  in  Local  Government 

unsupervised  by  the  Council,  what  vast  opportunities 
will  occur  for  the  grinding  of  axes  and  the  promotion 
of  pet  schemes  ?  It  is  not  the  virtue  of  the  part  (the 
Committee)  but  the  virtue  of  the  whole  body  (the 
Council)  that  keeps  government  pure  and  efficient. 
It  is  the  check  and  criticism  of  the  eighty  members 
who  are  not  serving  on  the  Theatres  Committee,  for 
instance,  that,  perhaps,  prevents  members  of  that 
particular  Committee  falling  a  prey  to  temptation. 

Just  consider  the  danger  of  the  Socialist  theory  of 
"  unsupervised  Committees,"  in  the  light  of  the  actual 
duties  which  the  Committee  dealing  with  the  drink 
traffic,  say,  in  London,  would  have  to  discharge. 
According  to  Mr.  Snowden,  the  duties  would  com- 
prise the  framing  of  regulations  as  to  the  time  of 
opening  and  closing  ;  the  fixing  of  prices  and  ap- 
pointment of  management  ;  the  purchase  of  stock. 
It  is  not  difficult  to  see  that  many  a  London  County 
Council  election  would  turn  on  the  rise  or  fall  in  the 
price  of  municipal  beer;  that  London  might  be  thrilled 
with  virtuous  indignation  at  the  decision  of  a  Free 
Trade  Council  to  purchase  and  push  the  sale  of  Munich 
beer  in  preference  to  the  Canterbury  brew  (municipal). 

Leaving  methods  of  administration  and  turning  to 
the  financial  aspect,  it  appears  that  "  the  profits  from 
the  drink  sold  in  the  municipal  public-houses  must 
decline  if  the  object  of  municipalisation  is  realised. 
In  fact,  the  real  test  of  the  success  of  municipalisa- 
tion must  be  the  reduction  of  profits,  and  every  loss 
upon  the  year's  trading  in  liquor  must  be  welcomed 
as  an  evidence  of  the  success  of  the  scheme,"  ^  because 
"  the  very  reason  for  the  municipalisation  of  the  drink 

^  Page  178. 
310 


Municipalisation   of  "  Drink  Traffic  " 

traffic  is  to  reduce  the  sale  of  drink  to  the  lowest 
possible  dimensions." 

It  may  well  be  asked  at  this  stage :  "  Why,  if  that 
is  your  aim,  why,  at  the  expiry  of  the  time  limit,  ever 
renew  licenses  at  all  ?  Is  not  that  a  cheaper  way  of 
decreasing  the  consumption  of  drink  than  by  muni- 
cipalisation at  a  loss  ?  " 

In  case  the  success  of  the  scheme  (that  is  to  say, 
the  loss  on  the  year's  trading)  is  not  forthcoming, 
and  there  is  a  failure  to  lose  the  ratepayers'  money, 
and  there  are  profits  to  be  dealt  with,  it  is  proposed 
that  they  "  shall  be  spent  by  the  localities  in  pro- 
viding counter  attractions  to  the  public-houses." 
The  rates  are  not  to  benefit. 

In  plain  English,  the  Socialist  proposition  is  this  : — 

1.  The  ratepayers  are  to  find  so  many  millions 
to  municipalise  the  public-houses,  breweries,  and 
distilleries. 

2.  The  Committees  managing  the  municipalised 
drink  traffic  in  each  local  area  are  to  endeavour 
to  show  a  loss  on  trading  each  year.  The  bigger 
the  loss  the  greater  the  success  ! 

3.  If,  by  any  unforeseen  cause,  a  profit  is  acci- 
dentally made,  then  such  profit  is  to  be  spent  in 
providing  counter  attractions  to  the  public-houses. 
In  other  words,  the  profits  of  one  year  are  to  be 
used  to  produce  in  the  next  year  a  loss  on  the 
municipal  drink  traffic. 

It  is  safe  to  say  that  a  more  ludicrous  set  of  pro- 
positions has  seldom  been  formulated  by  a  member 
of  the  Imperial  Legislature.  Nevertheless,  the  author 
claims  that  "  it  is  a  harmonious  and  scientific  scheme 
of  Temperance  Reform." 

31^ 


XX 

CONCLUSIONS 

I.  Of  the  real  extent  and  the  true  nature  of  the 
Socialistic  movement  in  Local  Government,  we  have 
now  gained  some  definite  notion.  What,  to  the 
casual  observer,  appears  a  mass  of  irregular,  in- 
definite, and  often  purposeless  transfer  of  functions 
from  private  enterprise  to  the  collective  effort  of  the 
community,  gains  a  new  meaning  and  purpose  when 
it  is  seen  to  be  part  of  the  vigorous  campaign  of  the 
Administrative  Socialist.  We  see  that  he  holds  that 
the  abolition  of  private  property  and  the  realisation 
of  his  ideal  never  will  be  gained  by  a  revolution, 
or  a  change  of  government  ;  his  plan  is  that  "  the 
principal  means  of  social  transformation  must  be 
the  conquest  of  public  powers  (in  local  administration 
as  well  as  in  Parliaments)."  ^  Therefore,  the  transi- 
tion is  being  effected  by  him  day  by  day,  and  little 
by  little,  in  various  ways,  and  mainly  through  Local 
Government. 

Nearly  all  the  matters  we  have  been  considering 
in  our  survey  of  municipalisation  were,  a  few  years 
ago,  private  functions,  and  the  recent  huge  advance 
of  Municipal  Socialism  instead  of  slackening  shows 
marked    signs    of    moving    with    accelerated    speed. 

^  Ferri,  Socialism  and  Positive  Science,  p.  133. 
312 


Conclusions 

Any  recent  change  in  the  views  of  town  councillors 
and  ratepayers  which  might  have  operated  to  check 
this  progress  has  been  nullified  by  the  action  of  the 
legislature  in  the  last  few  years,  which  has  taken  the 
shape  of  passing  numerous  measures  helping  forward 
the  Socialist  movement  in  local  affairs. 

Practically  the  present  position  is  that  we  have 
now  reached  the  half-way  house  to  complete 
Scientific  Socialism.  Individualism,  as  Professor 
Ferri  observes,  has  already  been  changed  into  "  a 
limited  individualism  and  a  partial  collectivism  by 
the  legal  limitations  of  the  jiis  abtiiendi,  and  by  the 
continued  transformation  into  social  functions  or 
public  ownership  of  services  (lighting,  water  supply, 
transport)  or  properties  (roads,  bridges,  canals) 
which  formerly  were  private  services  and  pro- 
perties." Municipal  Socialism  is,  indeed,  an  in- 
termediate phase  between  individualism  and  the 
ultimate  phase  of  absolute  collectivism. 

2.  The  proposed  reorganisation  of  Local  Govern- 
ment embodied  in  the  Fabian  pamphlet,  Munici- 
palisation  by  Provinces,  is  a  perversion  of  democratic 
principles.  It  is  not  government  by  the  people,  but 
government  by  double  and  treble  indirect  election. 
Administration  thus  conducted  must  be  irresponsible 
and  inefficient.  Whatever  may  be  thought  of  the 
objects  aimed  at  by  this  system,  it  is  clear  that  a 
very  mediocre  set  of  men  would  rule  the  Socialist 
roost.  Very  poor  results  would,  therefore,  be  the 
outcome  of  such  a  plan.  Apart  from  all  other 
questions,  it  must  be  admitted  that  it  is  essential 
to  the  success  of  Administrative   Socialism  that  the 

313 


Socialism  in  Local  Government 

ablest  men  should  be  at  the  summit  of  affairs.  The 
Fabian  plan  furnishes  no  prospect  of  securing  the 
ablest  men.  Under  it  the  boot  manufacturer  may 
be  a  public  director  of  shipbuilding,  and  the  trained 
mechanic  a  manager  of  agriculture. 

In  general,  the  direction  of  affairs  would  thus  fall 
into  the  hands  of  practically  uncontrolled  officials, 
who  usually  are  careless  of  public  opinion,  and,  when 
they  have  obtained  the  upper  hand  of  the  public 
representatives,  are  slack  in  the  performance  of  their 
duties.  They  become,  in  fact,  not  public  servants,  but 
irresponsible  dictators.  The  surest  road  to  national 
decay  is  to  place  supreme  power  in  the  hands  of  a 
bureaucracy.  And  it  is  awful  to  contemplate  the 
disastrous  consequences  of  a  Socialist  bureaucracy 
invading  and  controlling  every  department  of  life,  its 
powers  unchecked,  and  its  faults  uncorrected. 

3.  As  respects  Municipal  Trading  itself,  the  principal 
phase  of  Municipal  Socialism,  we  have  seen  that  it 
provides  none  of  those  magnificent  solutions  of  the 
evils  attendant  upon  private  enterprise.  Experience 
has  indicated  certain  weaknesses  in  private  effort, 
but  no  improvement  has  come  from  the  public 
supersession  of  that  effort.  The  weakness  remains, 
or  reappears  in  another  shape. 

The  financial  aspect  of  municipal  trade  is  not 
better  than  the  possible  and  alternative  system  of 
wisely  controlled  private  enterprise.  In  spite  of  the 
persistent  claims  of  municipal  traders  that  large 
profits  are  made  by  municipal  ventures,  we  are 
bound,  on  an  examination  of  such  evidence  as  is 
available,   to  conclude    that   the   ratepayers,   on   the 

314 


Conclusions 

whole,  suffer  loss.  It  is  of  prime  importance  that 
a  Royal  Commission  should  be  appointed  to  inquire 
into  and  report  upon  the  financial  results  of  municipal 
undertakings. 

The  price  and  quality  of  municipal  service  shows  no 
advantage  to  the  consumer  as  compared  with  private 
service.  A  municipality  will  resist  improvement  and  a 
competition  which  gives  a  cheaper  and  better  service. 

4.  Our  inquiry  into  the  respective  merits  of  public 
and  private  enterprise,  and  the  lessons  to  be  drawn 
from  State  administration,  indicates  that  a  lesser 
degree  of  efficiency  characterises  State  effort.  In 
spite  of  the  Socialist  contention  to  the  contrary, 
there  has  been  in  recent  times  no  improvement  in 
the  morale  of  public  servants  which  will  produce 
results  either  equal  to  or  better  than  is  obtained 
under  the  system  of  private  effort.  The  importance 
of  the  appeal  to  actual  experience  is  often  sadly 
underrated.  The  knowledge  that  comes  of  repeated 
practice  yields  the  only  certain  ground  on  which 
to  judge  the  future.  What  has  been  and  what  is, 
determines  what  is  to  come. 

5.  The  effect  of  Administrative  Socialism  upon 
national  character  and  progress — the  most  important 
phase  of  all — is  to  lessen  the  development  of  the 
human  faculties  of  comparison,  judgment,  and  fore- 
sight, to  destroy  the  independence  and  individuality 
of  the  citizen,  and  to  teach  him  to  rely  more  and 
more  upon  his  fellows  for  the  supply  of  his  needs, 
while  he  himself  neglects  to  contribute  his  fair  share 
of  activity  on  behalf  of  the  common  weal.      In  short, 

315 


Socialism  in  Local  Government 

Administrative   Socialism  means   reducing  men  and 
women  to  irresponsible  children. 

The  present  position  as  regards  the  progress  of 
the  race  has  been  admirably  summarised  by  Pro- 
fessor William  Ridgeway  in  his  address  upon 
"  Anthropology "  at  the  meeting  of  the  British 
Association  in  September,   1908: — 

"  In  ancient  days,"  he  states,  "  the  chief  end 
of  the  legislator  was  to  produce  a  stalwart  brood 
of  citizens  capable  of  bearing  arms  in  defence 
of  their  country  and  advancing  her  material 
prosperity.  Still  more  ought  this  to  be  the  aim 
of  our  legislators  to-day,  for  under  modern  con- 
ditions great  masses  of  population  are  huddled 
together  in  a  manner  hardly  known  to  ancient 
cities.  To  accomplish  this  great  end  the  legis- 
lator must  not  merely  look  to  improved  hous- 
ing of  the  poor  and  the  development  of  the 
physique  of  city  populations.  He  must,  as  far 
as  possible,  conform  to  the  principles  of  the 
stock-breeder,  anxious  to  rear  the  finest  horses, 
cattle,  or  sheep.  Yet  in  our  community  states- 
men of  both  parties  had  adopted  the  very  oppo- 
site poHcy.  The  children  of  the  working  classes 
were  educated  at  the  cost  of  the  State  ;  the 
offspring  of  the  wastrels  were  given  free  meals  ; 
and  already  there  were  demands  that  they  should 
be  clothed  at  the  expense  of  the  ratepayers,  and 
that  the  parents  should  even  be  paid  for  provid- 
ing them  with  lodging.  It  was  not  impossible 
that  before  long  these  demands  would  be  con- 
ceded by  either  party  in  the  State.  The  heavy 
additional  expense  incurred  in  this  policy  fell  upon 

316 


Conclusions 

the  middle-class  ratepayers  and  taxpayers  who 
had  to  feed,  educate,  and  clothe  their  own 
children  at  their  own  expense.  The  heavy 
burden  of  taxation  entailed  by  this  policy,  falling 
as  it  did  with  special  weight  upon  the  middle 
classes,  rendered  it  more  difficult  each  year  for 
the  young  men  and  the  young  women  in  that 
class  to  marry  before  thirty,  for  they  naturally 
shrank  from  the  expense  of  bringing  up  large 
or  even  moderate  sized  families.  We  need  not 
then  wonder  at  the  falling  off  in  the  rate  of 
increase  of  the  middle  classes.  Our  legislators 
were  bad  stockmasters,  for  they  were  selecting 
to  continue  the  race  the  most  unfit,  physically 
and  morally,  whilst  they  discouraged  more  and 
more  the  increase  of  what  has  been  proved  to 
be  the  outcome  of  a  long  process  of  natural 
selection.  The  present  policy,  therefore,  tended 
to  reduce  that  which  in  all  ages  had  been 
the  mainstay  of  every  State — the  middle  class. 
If  the  present  policy  of  our  legislators  were 
adhered  to,  the  moral  and  the  physical  standard 
of  the  British  citizen  would  steadily  deteriorate, 
for  the  population  would  gradually  come  to 
consist  of  the  posterity  of  those  who  were 
themselves  sprung  from  many  generations  of 
the  most  unfit.  Should  this  unfortunately  come 
to  pass,  it  would  be  the  result  of  human  pride, 
refusing  to  apply  to  the  human  race  the  laws 
which  inexorably  regulate  all  Nature." 
We  are  bound  to  conclude  that,  under  Adminis- 
trative Socialism,  commercial  development,  invention, 
and  discovery  would  cease  to  be.     We  know  from 

317 


Socialism  in  Local  Government 

experience  that  municipal  and  Government  depart- 
ments never  improve  or  invent  fresh  methods.  All 
Government  action  is  a  weak  imitation  of  private 
enterprise,  which  is  always  progressive,  but  is  often 
hampered  by  the  torpor  and  antiquated  systems  of 
Government  offices. 

Government  has  never  yet  invented  anything  of 
importance,  though  it  has  often  appropriated  great 
undertakings,  like  the  tramway,  telegraph,  telephone, 
and  electricity  systems,  which  have  been  invented  by 
individuals,  and  built  up  by  private  companies.  And 
when  it  has  secured  a  monopoly  of  those  systems,  it 
discourages,  indeed  denies,  the  right  of  any  indi- 
vidual to  promote  a  competing  service  of  an  improved 
type. 

6.  On  the  question  of  monopoly,  it  is  beyond 
dispute  that  the  monopoly  of  a  municipality  is 
infinitely  harder  to  overcome  than  the  monopoly  of 
private  individuals.  Municipalities  have  formed  a 
strong  combination  to  uphold  each  other's  monopoly 
privileges.  The  power  they  wield  in  Parliament  has 
prevented  the  adoption  of  fresh  developments  and 
new  ideas.  Attempts  by  private  enterprise  to  supply 
the  public  with  better  services  have  been  successfully 
resisted  by  monopoly-owning  towns.  It  is  to  be 
observed  that  against  the  unfairness  of  a  private 
company  the  citizen  has  always  the  weapon  of  his 
local  authority  or  Parliament  ;  but  when  the  local 
authority  is  a  monopoly  trader,  the  citizen  has  no 
practical  redress. 

7.  From  our  examination  of  the  condition  of 
labour  under  private  and  municipal  management,  we 

318 


Conclusions 

do  not  find  as  yet  any  serious  difference  of  treat- 
ment as  regards  hours  of  labour  and  rate  of  wages. 
There  is,  however,  this  distinction — that  the  muni- 
cipal workman  does  not  work  as  hard  as  the  man 
in  private  employment.  The  "  ca'  canny "  system 
prevails  all  through  municipal  undertakings,  and 
produces  slackness  and  inefficiency. 

Looking  forward,  it  needs  no  debauch  of  fancy  to 
imagine  that  the  constant  pressure  of  municipal  em- 
ployes, and  the  tempting  bait  of  higher  wages  held 
out  by  municipal  candidates,  will  probably  lead  to  an 
increase  of  municipal  wages  beyond  the  market  or 
trade  union  rate.  That,  of  course,  is  gross  corrup- 
tion, and  when  that  stage  is  reached,  British  Local 
Government  will  have  travelled  far  down  the  road  to 
destruction. 

8.  Dealing  with  the  two  phases  of  civic  activity 
known  as  "Municipal  Housing"  and  '<  Works  De- 
partments," their  failure  is  clearly  demonstrated.  As 
supplemental  to  or  an  alternative  plan  where  private 
effort  has  failed  or  needs  to  be  curbed,  they  are 
useful.  But  neither  has  been  used  with  discretion, 
and,  elevated  to  a  sphere  not  their  own,  have  met 
with  disaster. 

9.  All  that  has  been  adduced  in  previous  chapters 
points  to  the  need  of  an  alternative  policy  to  muni- 
cipal trading.  Admittedly  it  is  difficult  to  draw  a 
hard  and  fast  line  between  the  functions  of  local 
administration  and  private  enterprise.  Unrestrained 
private  venture  is  too  likely  to  become  tyrannical  and 
contrary  to  public  interest.     There  must,  therefore, 

319 


Socialism  in  Local  Government 

be  some  control  of  trade  which  avoids  the  perils 
and  losses  of  municipal  enterprise.  Local  Govern- 
ment should  be  equipped  with  a  sound  set  of 
laws  regulating  monopolies  of  services  or  func- 
tions necessary  to  the  whole  community.  In  the 
event  of  the  failure  of  private  enterprise  to  supply 
a  public  need,  then  the  local  authority  may  under- 
take the  service.  The  latest  German  franchises 
provide  excellent  examples  of  the  basis  upon  which 
large  private  ventures  of  a  monopoly  character 
should  be  allowed  to  operate  in  a  town.  Huge 
profits  are  secured  by  this  system  of  franchises  for 
the  benefit  of  the  ratepayers. 

To  ensure  the  satisfactory  carrying  out  of  this 
policy  of  control,  a  special  department  of  the  Local 
Government  Board  should  be  established  for  the 
purpose  of  inquiry  and  report  upon  cases  where  a 
local  body  proposes  to  embark  in  a  trading  venture  ; 
and  all  franchises  entered  into  between  a  private 
concern  and  a  municipality  should  be  examined 
and  ratified  by  the  Board.  Provision  should  be 
made  for  the  fullest  information  to  be  given  to  the 
ratepayers. 

10.  Besides  utilising  the  important  feature  of 
Local  Government  known  as  municipal  trading  for 
advancing  his  views,  the  Administrative  Socialist  has 
used  educational  administration  in  order  to  substitute 
the  State  for  the  parent.  Not  only  are  the  rudiments 
of  education  taught,  but  many  of  the  children  are 
now  fed,  and  all  are  medically  inspected.  From 
this  stage,  it  is  only  one  step  to  three  State  meals 
at  school  every  day,  medical  treatment,  and  clothing. 

320 


I 


Conclusions 

In  fact,  surveying  the  present  conditions,  one  is 
driven  into  the  belief  that  even  now  the  children 
« belong  more  to  the  State  than  to  the  parents." 
Parental  responsibility  is  vanishing.  Nothing  is 
being  done  to  "  protect  what  remains  of  the 
family."  On  the  contrary,  every  development  is 
towards  exclusion  of  the  parents  from  the  care 
of  their  children. 

It  is  true  that  as  each  fresh  attack  is  made  upon 
parental  responsibility,  the  pious  opinion  is  expressed 
that  the  scheme  will  result  in  strengthening  the 
position  of  parents  and  in  inducing  them  to  recog- 
nise their  duties  to  their  offspring.  The  consequence, 
as  experience  shows,  has  been  far  otherwise.  Events 
are  every  day  demonstrating  the  fallacy  of  the  view 
that  the  State  can  by  taking  over  the  duties  of  the 
parent  teach  the  neglectful  parent  his  duty.  The 
parent,  for  whose  benefit  the  State  is  acting,  welcomes 
the  intervention  of  the  State  as  saving  him  trouble 
and  expense,  an  expense  borne  by  other  parents  who 
are  fulfilling  their  responsibilities. 

The  blunder  of  recent  legislation — Socialistic  in 
the  extreme — is  that  it  has  never  attempted  to  force 
the  parents  to  discharge  their  duties  to  their  children. 
This  might  have  been  done  by  a  wider  interpretation 
of  the  Acts  relating  to  Cruelty  to  Children.  For 
example,  the  need  of  medical  inspection  and  treat- 
ment of  many  children  is  only  too  clear.  But  why 
not  have  placed  upon  the  parent  the  duty  of  sending 
to  the  local  education  authority  a  medical  certificate 
and  report  as  to  the  health  of  his  child  ?  If  there  is 
evidence  of  continued  neglect,  the  local  education 
authority   should   report   those   cases   to    the    police 

321  X 


Socialism  in  Local  Government 

authorities,  who  would  make  inquiries  and  prosecute 
if  necessary.  Such  a  plan  enforces  and  does  not 
weaken  parental  responsibility  ;  it  places  the  burden 
of  expense  on  the  right  shoulders  ;  and  it  avoids 
what  the  present  state  of  affairs  involves — namely, 
the  conversion  of  the  medical  profession  into  a  class 
of  civil  servants — a  conversion  entailing  a  huge 
expenditure  to  the  nation. 

II.  Our  Poor  Law  system  always  contained  more 
or  less  a  tinge  of  Socialism.  Prior  to  1834,  as  we 
have  seen,  Poor  Law  administration  had  become 
distinctly  Socialistic,  with  disastrous  results.  Then 
came  a  swing  back  to  saner  principles.  We  are 
once  again  importing  Socialism  into  our  Poor  Law 
institutions,  which  are  fast  becoming  mere  pampering 
establishments  of  what  Carlyle  called  "  a  universal 
sluggard  and  scoundrel  amalgamation  society." 
Public  prodigality  is  to  be  seen  in  almost  every 
union,  accompanied  in  many  cases  by  public  corrup- 
tion. Wherever  the  system  is  dominated  by  Socialist 
ideals,  the  lesson  is  taught  to  the  people  that  idleness 
and  vice  may  eat  that  bread  which  the  virtue  and 
honesty  of  the  independent  poor  may  starve  for.  To 
it  the  slothful  waster  looks  for  that  support  which 
he  deliberately  refuses  to  earn.  And  when  he  has 
secured  it,  he  is  free  to  enter  the  workshop  of 
his  former  employer  to  exhibit  the  prosperity  and 
security  of  his  condition,  and  to  taunt  the  workman 
at  the  bench  as  a  fool  who  works  for  his  livelihood 
when  he  could  obtain  it  for  nothing.  In  fine,  the 
Socialistic  dispensation  of  the  Poor  Law  teaches  the 
lesson  that   it   is   sometimes   good   not   to    be   over- 

322 


Conclusions 

virtuous  ;    that   the   greater   our  idleness,   the   more 
munificent  is  pubhc  charity. 

12.  The  Socialist  claim  that  Society  ought  to 
assure  to  the  labourer  work,  that  the  State  ought  to 
provide  work  for  every  one,  cannot  be  admitted. 
Capitalists  cannot  always  find  profitable  work  for  all, 
nor  can  the  State  do  so. 

The  experience  gained  from  actual  experiment 
shows  that  the  concession  by  the  Government  of 
any  such  right  would  lead  to  economic  disaster.  A 
worse  state  of  things  would  be  the  result.  For  the 
State  would  have  to  adopt  Sociahsm  straight  away. 

The  answer  to  the  demand  that  the  principle  of 
« the  Right  to  Work  "  should  be  recognised  by  the 
State  has  been  thus  ably  summarised  :  -^ — 

"The  State  cannot  undertake  to  find  work 
for  you  ;  if  it  did  find  really  paying  work  for 
you,  such  as  you  have  been  doing,  it  would 
be  at  the  expense  of  your  comrades  now  em- 
ployed ;  and  if  it  were  not  paying  work,  if  the 
results  would  not  support  you,  the  taxpayers 
would  have  to  make  it  up,  and  the  more  of  you 
that  came,  the  more  they  would  have  to  contri- 
bute. The  reason  you  are  now  out  of  work  is 
because  your  work  was  not  sufficiently  profitable 
to  your  late  employer  ;  the  reason  this  work 
which  you  ask  the  State  to  undertake  was  not 
undertaken  is  because  it  would  not  pay  cur- 
rent profits,  at  least  in  most  cases.  Why,  then, 
should  the  Government  undertake  it  ?  And  if 
it  did,  you  are  not  exactly  the  class  of  workers 

^  Graham,  Socialism,  p.  324. 
323 


Socialism  in  Local  Government 

that  it  would  prefer  to  employ.  Possibly  with 
select  workers  and  good  superintendents  it  might 
make  the  work  commercially  paying,  but  hardly 
with  you,  if  it  may  be  said  without  offence. 
But  there  is  a  stronger  reason  against  its  under- 
taking such  work.  The  State,  the  Government, 
does  not  consider  it  amongst  its  functions  or 
duties  to  find  work  for  all  citizens,  and  then  to 
set  them  at  it  ;  it  is  not  at  present  constituted 
for  such  a  purpose,  and,  to  say  the  truth,  is  not 
well  suited  for  it.  Neither,  for  that  matter,  is 
the  local  authority.  It  cannot,  then,  do  what 
you  want,  start  the  work  you  recommend,  with- 
out working  at  a  loss  to  be  borne  by  other 
citizens,  while  even  if  working  successfully  and 
on  business  principles,  it  would  come  in  com- 
petition with  the  same  kind  of  work  under 
private  enterprise,  in  which  case  it  would  to  the 
extent  it  succeeded  create  as  many  fresh  unem- 
ployed as  it  had  set  to  work. 

"The  Government  cannot,  then,  guarantee 
you  work  ;  but  it  accepts  the  responsibility  of 
trying  to  make  the  total  field  of  industry  as  wide 
as  possible  for  you  ;  of  giving  to  all  citizens  in 
future  more  and  fairer  chances  of  helping  them- 
selves, by  educational  facilities  and  in  other 
ways.  The  State  can  reform  unwise  laws  or 
unjust  laws  that  may  have  injured  the  labouring 
classes.  It  will  interfere  to  protect  your  life, 
your  property,  your  health.  It  can  readjust 
the  burden  of  taxation,  perhaps,  a  little  more 
equitably,  and  in  your  favour.  In  these  and 
other   ways   within    the    understood    limits,   the 

324 


Conclusions 

state  can  help  to  place  labourers  in  a  better  and 
a  fairer  position,  after  which  their  fate  must  be 
left  to  themselves,  our  Government  not  being  a 
paternal  one,  and  its  policy  having  had  for  aim 
the  making  of  self-reliant,  prudent,  and  perse- 
vering men  rather  than  grown  children  ;  though 
even  if  the  State  could  make  all  its  citizens 
comfortable,  provide  for  all  their  wants,  and 
remove  all  risk  and  danger,  such  a  consumma- 
tion would  be  dearly  purchased  by  the  sapping 
of  the  high  virtues  of  self-dependence  and  fore- 
thought, which  would  be  the  only  sure  result 
of  the  otherwise  futile  and  impossible  aim. 

"As  for  the  existing  unemployed,  whose  case 
we  sincerely  deplore,  the  State  or  the  munici- 
paUties  will  do  what  is  possible  within  the  limits 
laid  down  to  mitigate  temporary  hardships. 
Relief  work  of  a  useful  nature,  in  which  there  is 
no  danger  of  competing  with  private  enterprise, 
will  be  undertaken  in  supplement  to  private 
benevolence.  More  the  State  cannot  promise 
without  changing  its  functions,  without  entering 
on  new  paths  fraught  with  risk  to  national 
interests,  and  especially  the  material  and  moral 
interests  of  the  working  classes  themselves." 

13.  The  proposal  for  municipahsation  of  the 
drink  traffic  is  frankly  based  upon  the  fact  that 
"  the  public-house  is  a  public  convenience,"  but 
needs  stricter  control.  The  Socialist  plan  for  State 
public-houses,  however,  ignores  the  general  and 
rapid  progress  towards  temperance  made  in  recent 
years  by  the  nation.      Under  the   Licensing  Act  of 

325 


Socialism  in  Local  Government 

1904  each  year  sees  the  extinction  of  a  number  of 
licenses.  Moreover,  the  scheme  as  outlined  by  Mr. 
Philip  Snowden,  M.P.,  in  Socialism  and  the  Drink 
Question,  is  so  crude  and,  withal,  so  foolish,  that  it 
has  only  to  be  stated  to  be  condemned. 


326 


INDEX 


Administrative  County  of  London 
Electric  Power  Bill  (1905),  158 

Administrative  Provisions  (Education) 
Act  (1907),  4 

Administrative  Socialism,  Aim  of, 
I.,  I 

Administrative  Socialism  and  national 
character,  Conclusions,  315 

Administrative  Socialists,  3 ;  the 
greatest  danger,  4 

Administrative  Socialists'  aims  baffled 
by  geographical  limitations,  15 

Admiralty  criticised  by  Public  Ac- 
counts Committee,  126 

Aim  of  Administrative  Socialism,  I. ,  i 

Alternative  Policy,  An,  XV.,  231; 
to  municipal  trading,  Conclusions, 

319 

American  business  men  on  mono- 
poly, 167 

American  Civic  Federation  Commis- 
sion,^report  on  British  gas  under- 
takings to,  81  ;  report  on  "  Labour 
and  Politics  "  to,  193 

Anthropology,  address  of  Professor 
W.  Ridge  way,  316 

Aristocracy  of  talent,  Socialist  dream, 

19 

Armour,  Councillor  A.,  on  Liverpool 
tramways  and  widenings,  54 

Armstrong,  Lord  (Sir  William),  and 
Ordnance  Department,  110 

Ashley,  Professor,  on  municipal  hous- 
ing in  Prussia,  242 

Association  of  Municipal  Corpora- 
tions and  local  veto,  147;  electric 
bulk  supply,  157,  162  ;  object,  173 

"Auction  clause"  in  Bills  for  raising 
capital,  236 

Audit  of  London  County  Council 
tramways  system,  56 

Audit  of  municipal  accounts,  report 
of  Joint  Select  Committee,  68 ; 
of  Departmental  Committee,  73 


Auditor  (Local  Government  Board) 
censures  London  County  Council 
on  housing  accounts,  209 


Bagenal,  Mr.  P.  H.,  report  on  test 
labour,  284 

Banking  and  trading,  municipal, 
Trade  Union  Congress  (1905),  re- 
solutions, 189 

Banner,  Mr.  J.  S.  Harmood,  M.P., 
on  establishment  charges,  52 ;  tram- 
ways and  widenings,  54  ;  sinking 
funds,  66 

Barnett,  Canon,  on  Local  Govern- 
ment Board  inspectors,  128 

Bastiat,  Professor,  on  individual  tor- 
por from  State  action,  138 

Baths  and  Wash-houses  Act  (1846),  28 

Battersea  labourers'  wages,  183 

Battersea  Works  Department,  218 

Bax  and  Quelch,  Messrs.  (New 
Catechism),  on  rates  and  profits,  45 

Benn,  Sir  J.  W. ,  M.P.,  on  London 
County  Council  housing,  204 

Berhn  electric  lighting,  241 

Bermondsey,  cost  of  State  child,  275 

Bethnal  Green  sanitary  inspector  on 
London  County  Council  housing, 
205 

Binnie,  Sir  Alexander,  on  Works 
Department,  224,  225 

Birkenhead,  Lord  Mayor  of,  on  per- 
sonnel \n  municipal  councils,  99 

Birmingham  councillor  on  municipal 
trading,  104 

Birmingham  drink  trade,  Mr.  J. 
Chamberlain's  scheme,  305 

Birmingham  gas  undertaking  and 
municipality,  235 

Birmingham  municipal  housing 
schemes,  210 

Birmingham  report  on  unemployed, 
282 


327 


Socialism  in  Local  Government 


Blanc,    Loais,    national    workshops, 

295 

Blashill,  Mr.  T. ,  on  Works  Depart- 
ment, 224 

Board  of  Education,  memorandum 
on  medical  inspection,  259 

Board  of  Trade,  ex-official  on  respon- 
sibility and  restriction,  143 

Board  of  Trade,  fomer  President  on 
electric  light  development,  150 

Board  of  Trade,  President  on  electric 
bulk  supply,  160 

Board  of  Trade  Return,  tram- 
ways (1907),  57;  electricity  (1907), 

58 

Boards,  Provincial  and  National, 
Socialist,  18 

Bolton  municipal  motor  bus,  38 

Booth,  Right  Hon.  Charles,  on  Lon- 
don housing,  208 

Boroughs,  London,  with  municipal 
electric  light,  58 

Boundary  Commission,  proposed, 
16 

Boundary  street  dwellings,  205 

Boyle,  Councillor  D. ,  on  personnel  in 
municipal  affairs,  99 

Boyle,  late  Sir  Courtenay,  evidence 
as  to  gas,  87 

Bradford  Labour  Party  and  feeding 
of  school  children,  249 

Bradford  Municipal  Gas  Works, 
Manager's  address,  88 

Bradford,  resolution  for  loan  to  pur- 
chase coal  mine,  34 

Bramwell,  Sir  Frederick,  on  Electric 
Lighting  Act  (1882),  154 

Briscoe  Buildings,  loss,  207 

British  Association  (1908),  Professor 
W.  Ridgeway  on  modern  legisla- 
tion, 316 

Broadhurst,  Mr.,  M.P. ,  opposes 
Joint  Select  Committee  (1903), 
42 

Bruce,  Mr.  W.  W.,  on  Tottenham 
L.C.C.  cottages,  207 

Burns,  Right  Hon.  J.,  M.P.,  table  of 
municipal  milk  depots,  35  ;  opposes 
Joint  Select  Committee  (1903),  42  ; 
appoints  Departmental  Committee 
(1906),  43  ;  and  municipal  labour, 
220,  223;  L.C.C.  as  employer, 
227  ;  on  labour  colonies  and  relief 
works,  286,  289 

Bury  St.  Edmunds,  labourers'  wages, 
183 


"  Ca'  canny"  system,  319 

Cadoux,  M.  Gaston,  on  Paris  gas 
supply,  239 

Calcraft,  Sir  H. ,  on  profits  of  electric 
lighting,  154 

Candidates,  labour,  190 

Cannan,  Mr.  E. ,  on  advantages  of 
municipal  enterprise,  84 

Capital  V.  Socialist  municipalities,  9 

Carlyle,  Thomas,  on  failure  of  de- 
mocracy, 19  ;  on  pampering  estab- 
lishments, 322 

Carriers,  municipal,  38 

Central  Unemployed  Body  and  labour 
colonies,  287 

Chamberlain,  Right  Hon.  J.  ,M.P. , 
on  municipal  labour,  226  ;  on  drink 
trade  in  Birmingham,  305 

Chesterfield  Chamber  of  Commerce, 
Secretary  on  electric  bulk  supply, 

158 

Children,  school,  medical  inspection 
and  feeding.  Labour  policy,  192, 
248 ;  figures,  252,  260 ;  Conclu- 
sions, 320 

Churchill,  Lord  Randolph,  on  de- 
fective armaments,  iii  et  seq. 

Civil  Service,  inefficiency,  130 

Clarion  Fellowship,  3 

Clyde  Trust  steamboats,  38 

Coal  supply,  municipal,  suggestions, 

34 
Colchester,  refuse  collectors'  wages, 

184 
Colmore,    Mr.    Cregoe,    scheme    of 

flats,  212 
Commercial  Gas  Act  (1875),  sliding 

scale,  236 
Commissariat  scandal,  Egypt,  123 
Committee  on  Physical  Deterioration 

on    medical    treatment   of    school 

children,  258 
Communism,  danger  from  State  poor 

relief,  268 
Companies,  limited  liability,  without 

voting  power,  175 
Comparison  of  municipal  and  com- 
pany tramways  unjust,  86 
Comptroller,    L.C.C,    and    Works 

Department,  222 
Conclusions,  XX.,  312 
Contractors'  profits,  saving  of,  fallacy, 

178 
Contracts,     Sheffield     L.R.C.     pro- 
gramme, 191  ;  and  stores  in  South 

African  War,  124,  125 

28 


Ind 


ex 


Cookham  Buildings,  cost  under 
Works  Department,  228 

Co-operation  and  municipal  trading, 
comparison,  106 

Corruption  and  municipal  scandals, 
132 ;  employes,  187 ;  and  in- 
efficiency in  Works  Departments, 
219 

Cost  of  public  lighting,  returns,  90 

Crooks,  Mr.  W.,  M.P.,  and  Poplar, 
L.G.B.  Report,  272 

Cross,  Mr.,  Act  (1875),  201 


Darwin,  Major  Leonard,  on  profits 
and  rates,  46 ;  on  municipal  tram- 
ways and  private  companies,  80  ; 
on  failures  in  co-operation,  106 

Davenport,  Mr.  Bromley,  M.P. ,  on 
municipal  monopolies,  172 

Debt,  Unproductive  and  Reproduc- 
tive, 32 

Democracy,  Carlyle  on,  19 

Democracy  and  the  State,  g 

Departmental  Committee  on  accounts 
of  local  authorities  {1906),  43,  73; 
and  depreciation,  65 

Depreciation  omitted  from  muni- 
cipal accounts,  61 

Devonport  and  District  Tramways 
Company     street     improvements, 

54 

Dickinson,  Mr.  W.  H.,  on  Works 
Department,  223 

Diderot,  free  meals  and  education 
for  children,  247 

Dockyard  constituencies  and  elec- 
tions, 216 

Donald,  Mr.  Robert,  on  municipal 
profits  and  extravagance,  tj,  85 

"  Drink  Traffic,"  Municipalisation  of, 
XIX.,  305 


Economist,  description  of  French 
national  workshops,  295 

Edgar  and  Walton  Clark,  Messrs., 
report  on  gas  undertakings,  8  i 

Education,  Socialism  in,  XVI.,  246 

Election,  Indirect,  19 

Electric  bulk  supply,  history,  156 

Electric  Lighting  Act  (1882),  hamper- 
ing effects,  148,  150,  153 

Electric  Lighting  and  Tramways 
Acts,  hindrances  to  development, 
235 


Electricity     and      London     County 

Council,  14 
Electricitv,    municipal  undertakings, 

58 
Electricity,  returns  of  cost,  92 
Electricity  supply,  history,  149 
Electricity  supply  and  municipalities, 

172;  Miaiicipal  Journal  ox\.,  174 
Electricity  Supply  Bill  (1904),  opposi- 
tion, 174 
Elswick  gun  factory,  history,  no 
Enterprise,  Lesson  of  State,  IX.,  109 
Enterprise,  State  and  private,  9 
Enterprise,    Public    versus     Private, 

VIII.,  96 
Establishment  charges  omitted  from 

municipal  accounts,  51 
Evolutionary      Socialism,      3 ;      the 

greatest  danger,  4 
Extent  of  Municipal  Trading,  IV.,  32 


Fabian  Essays,  Socialist  Poor  Law 
programme,  271 

Fabian  manifesto  on  invention  (1900), 
141 

Fabian  manifesto,  nepotism  and 
electioneering  services,  195 

Fabian  methods  described  by  Mr. 
G.  Bernard  Shaw,  5,  7 

Fabian  movement,  progress,  13 

Fabian  movement  and  local  govern- 
ment, 15 

Fabian  plan  of  Indirect  Election,  19 

Fabian  reorganisation  of  local  govern- 
ment, 313 

Fabian  Socialist  on  early  Poor  Law 
administration,  268 

Fabian  Socialists,  3 

Fabian  Society,  objects,  5  ;  municipal 
programme,  9 

Fabian  Society  and  drink  traffic,  306, 
308 

Farrer,  Sir  J.  (late  Lord  Farrer),  on 
Post  Office,  127 ;  on  evils  of  State 
regulation,  144 ;  on  local  bodies 
and  electricity,  152 ;  on  London 
County  Council  and  contractors, 
221 

Feeding  of  School  Children  Act 
(1906),  4 

Ferri,  Professor,  plan  of  social  trans- 
formation, 312 

Fields'  Gas  Analysis,  table,  88 

Fildes,  Mr.  James,  on  Manchester 
housing,  209 


329 


Socialism  in  Local  Government 


!' 


Finance,  Sheffield  L.R.C.  pro- 
gramme, 190 

Financial  Aspect  of  Municipal  Trad- 
ing, VI.,  45  ;  summary,  82 

Flint,  Professor,  on  the  State  and  the 
unemployed,  280 

Forbes,  Professor,  on  Electric  Light- 
ing Act  (1882),  153 

Fowle,  Rev.,  on  the  Poor  Law,  267 

France,  municipal  control,  237  ;  State 
workshops  experiment,  292 

"Freedom  of  trading"  provision, 
177 

Fust,  Mr.  H.  Jenner,  report  on  Liver- 
pool unemployed,  281 

Gas,  late  Sir  Coiurtenay  Boyle's  evi- 
dence, 87 
Gas  Analysis,  Fields'  table,  88 
Gas    undertakings    and    municipali- 
ties, 172 ;    Mr.    E.    E.   Leigh  on, 

105 

Gas  undertakings,  British,  American 
report  on,  8i 

Gas  Works  Clauses  Act  (1847),  pro- 
fits and  dividends,  236 

General  Power  Distribution  Bill,  156, 
172 

German  franchises  and  monopolies, 

320 

German  town-planning  and  munici- 
palities, 213 

Germany,  municipal  control,  241 

Glasgow  Corporation  and  University 
and  James  Watt,  142 

Glasgow  councillors  and  municipal 
employes,  193 

Glasgow  Lord  Provost  on  municipal 
employes,  194 

Glasgow  telephone  undertaking,  37 

Gorst,  Sir  J.  E.,  M.P.,  on  Civil  Ser- 
vice, 131 

"Govern,  not  trade,"  theory  and 
practice,  232 

Government,  interpretation  and  dis- 
cussion of  functions,  96 

Greater  London,  suggested  Socialist 
extension,  18 

Green,  Mrs.  J.  R. ,  on  early  town 
life,  25,  26 

Greenwich  tunnel,  speed  of  work 
under  contract,  225 

Gruning,  Mr.,  on  Works  Depart- 
ment, 224 

Guthrie,  Mr.  E.,  on  allowance  for 
depreciation,  63 


Hackney  Wick  sewer,  slow  work 
225 

Haggerston  candidate  (1908),  advo- 
cates increased  old  age  pension,  271 

Halifax  tramway  strike  (igo6),  197 

Halstead,  Admiral,  on  Government 
gun  enterprise,  in 

Hardie,  Mr.  Keir,  M.P.,  on  muni- 
cipal employes,  188 

Haw,  Mr.  George,  on  Housing  Acts, 
128 ;  London  County  Council 
housing,  205 

Hazeldine,  Mr.  G.  D. ,  protests 
against  Nottingham  "  packed " 
meeting,  196 

Health,  Sheffield  L.R.C.  programme, 
191 

Heptarchy,  New,  II.,  13 

Herbert,  Mr.  Nicholas,  report  on 
Birmingham  unemployed,  281 

Hey,  Alderman,  Halifax,  labour 
threat,  198 

History  of  Municipal  Trading,  III. ,  23 

Hogarth  Buildings,  cost  under  Works 
Department,  228 

HoUesley  Bay  colony,  Mr.  J.  Burns 
on  working,  286 

Home  Rule,  Socialist  form  of  local 
government,  17 

Homes  (Limited),  scheme  of  flats, 
212 

Hours  of  labour.  Trades  Union  Con- 
gress (1905),  resolution,  189 

Housing  Acts,  128,  201 

Housing,  Municipal,  XIII.,  200;  in 
Prussia,  242  ;  Conclusions,  319 

Housing,  Sheffield  L.R.C.  pro- 
gramme, 190 

Housing,  Town- Planning,  &c. ,  Bill 
(1908),  213 

Housing  of  the  Poor,  Royal  Com- 
mission (1884),  201 

"  Housing  of  the  Working  Classes," 
200 

Housing  of  the  Working  Classes  Act 
(1890),  30 

Huddersfield,  Works  Department 
failure,  230 

Independent    Labour    Party,    3 ; 

programme,  "  right  to  work,"  276  ; 

Right  to  Work  Bill,  302  ;  and  drink 

traffic,  306 
Indirect  Election,  Fabian  plan,  18 
Individualism  and  State  interference, 

discussion,  136 


330 


Ind 


ex 


Individualist  view  of  local  govern- 
ment, 232 

"  Industrial  peace,"  Mr.  Sidney 
Webb's  vision,  197 

Inquiry,  Opposition  to,  V.,  40 

Inter-Departmental  Committee  on 
School  Children  (1905),  report  on 
Bradford  work,  250 ;  general  re- 
port, 252 

Interest  on  loans,  increase  of,  under 
municipal  trading,  79 

International  Socialist  Workers  and 
Trade  Union  Congress  (1896),  10 

Invention,  Fabian  manifesto  {1900), 
141 

Ipswich  tramways  accounts,  55 

Islington  Borough  Council,  cost  of 
gas  and  electricity,  59 

Johanna  Street  School,  feeding 
of  children,  abuse,  260 

Joint  Committee  Manifesto  (1893) 
and  municipalisni,  3 

Joint  Committee  on  Underfed  Chil- 
dren, report,  251 

Joint  Select  Committee  on  Municipal 
Trading  (1900),  40;  evidence  on 
lighting,  155,  157;  (1903),  42;  ac- 
counts, 68       ' 

Joint-stock  companies.  Socialist  fal- 
lacies, lOI 


Kerr,  Dr.,  on  medical  treatment  of 
school  children,  257 

Kidd,  Mr.  Benjamin,  on  Socialist 
aim,  140 

Knox,  Mr.  Vesey,  on  national  loss 
through  delay  in  adopting  new  in- 
vention, 162 


Labour  and  Politics,  XII.,  178 
Labour  conditions,  Conclusions,  318 
Labour  Representation  Committees, 

190 
Labour    troubles    under    municipal 

trading,  197 
Laindon    Labour    Colony,    effect   of 

labour  test,  281 ;  Mr.  J.  Burns  on, 

288 
Lamartine  on  State  control  of  labour 

and  contract,  280 
Lambeth    Board   of    Guardians,    in- 
quiry as   to  feeding    of   children, 

260 


Lancashire  Electric  Power  Company 
Bill  (1900),  opposition,  158,  173 

Lansbury,  Mr.,  censure  of  L.G.B, 
report,  274 

Lee,  tunnel  under,  slow  work,  225 

Leeds  Corporation,  report  to,  on 
municipal  labour,  230 

Leicester,  foolish  Poor  Law  adminis- 
tration, 283  ;  gas  undertaking  and 
municipality,  235  ;  Town  Council 
and  municipal  employfe,  193 

Leigh,  Mr.  E.  E. ,  on  gas  under- 
takings and  municipalities,  105 

Leroy-Beaulieu,  M.  Paul,  on  State  as 
world-god,  141 

Lesson  of  State  Enterprise,  IX.,  109 

Liberal  Party,  "  permeation"  of,  6 

Licensing  Act  (1904),  effect,  307 

Lighting,  public,  returns  of  cost, 
90 

Lighting  under  Socialist  Board,  142 

Limited  liability  companies  without 
voting  power,  175 

Liverpool,  report  on  unemployed, 
281 ;  Trade  Union  Congress  (1906), 
resolution,  185;  tramways  and  im- 
provements, 54 

Liverpool  alderman  on  personnel  in 
municipal  affairs,  99 

Loans,  municipal,  and  interest,  79 

Local  Government  Act  (1888),  work- 
ing, 8,  9 

Local  Government  and  Fabian  move- 
ment, "  Home  Rule,"  15-17 

Local  Government  Board  Auditor 
censures  L.C.C.  on  housing  ac- 
counts, 209 

Local  Government  Board,  establish- 
ment, 31  ;  housing  and  public 
health,  128  ;  President,  on  chaos, 
98 ;  report  on  debts  on  obsolete 
subjects,  67 ;  reports  on  pauperism, 
272  ;  reports  on  relief  works,  280  ; 
return  of  borough  rateable  values, 
106;  returns  of  "reproductive" 
undertakings,  46;  suggestion  for 
investigation  department,  245,  320 

Local  Government,  Socialist  in- 
vasion, 2 

Local  veto  in  Tramways  Act  (1870), 

147 
London  and  District  Electricity  Supply 

Bill  (1908),  160 
London  County  Council,  first  Fabian 

tactics,   6;    "nursing   mother"   of 

Socialism,    7;    and    electric    bulk 


331 


Socialism  in  Local  Government 


supply, 158;  housing,204;  Southern 
Tramways,  unjust  comparison,  86  ; 
steamboats,  38  ;  probable  effect  of 
referendum,  103;  tramways  system, 
accounts  and  improvements,  56 ; 
and  water,  tramways,  and  elec- 
tricity supply,  14;  Works  Depart- 
ment, 218  et  seq. 

London  and  Poplar,  pauperism 
statistics,  272 

London  Education  Committee  and 
feeding  of  children,  259 

London  traffic,  Royal  Commission 
and  local  veto,  148,  206 

London  United  Tramways,  expendi- 
ture, c;3,  57 ;  unjust  comparison, 
86 

Lowther,  Mr.  J.  W. ,  M,P. ,  on  electric 
tramways,  148 


M'CoLL,  Mr.  D.,  on  allowance  for 

depreciation,  62 
Macdona,  Mr.  J.  C,  M.P. ,  on  muni- 
cipal monopoly  and  private  enter- 
prise, 173 
Macdonald,  Mr.  J.   Ramsay,   M.P. , 

on   children   and   the   State,   246  ; 

on  "  Unemployed  Workmen"  Bill, 

277 
Manchester    and    Salford,    effect    of 

labour  test,  281 
Manchester  Corporation  Bill  (1906), 

opposition,  195 
Manchester  Corporation  refuse  to  set 

up  Works  Department,  230 
Manchester  councillor  on  personnel  in 

municipal  affairs,  99 
Manchester  housing,  duty  of  citizens, 

209 
Manchester  member  on  lighting  by 

companies  and  local  bodies,  150 
Manifesto,    Fabian,     nepotism     and 

electioneering  services,  195 
Manifesto  of  Joint  Committee  (1893) 

and  municipalism,  3 
Markets,    origin    and    development, 

25 

Marshall,  Professor  A.,  on  problem 
of  the  Residuum,  264;  hopeful 
view  of  unemployed  problem,  303 

Marx,  Karl,  conception  of  materialist 
State,  140 ;  disciples  and  revolu- 
tion, 3 

Maxwell,  Alderman,  on  personnel  in 
municipal  affairs,  99 


Meadowcroft,  Councillor,  on  Man- 
chester Tramways  Department,  195 

Medical  Inspection  of  School  Chil- 
dren, 4 

Medical  Relief  Disqualification  Re- 
moval Act  (1885),  270 

Metropolitan  Board  of  Works,  rate- 
payers' lack  of  interest,  20 

Metropolitan  Electric  Tramways 
Company,  extension  charges,  53 

Metropolitan  Water  Board,  creation 
of,  14 

Michael  and  Will,  Messrs.,  on  gas 
and  water  law,  236 

Middlesex  tramways,  widenings  and 
accounts,  53 

Milk  depots,  municipal,  35 

Mill,  J.  S.,  on  government  agency  and 
individual  enterprise,  29  ;  on  limits 
of  province  of  government,  100; 
on  joint -stock  and  individual 
management,  loi 

Millbank  site,  cost  of  blocks  under 
contract,  229 

Monopoly,  Question  of,  XI.,  164; 
Conclusions,  318 

Motor  buses,  municipal,  37 

Municipal  Corporations,  Royal  Com- 
mission (1835) ,  on  local  government, 
27;  returns  of  undertakings,  33 

Municipal  Corporations  Act  (1835), 
27.  305  ;  (1882),  "  freedom  of  trad- 
ing "  provision,  177 

Municipal  debts  and  interest  on 
loans,  79 

Municipal  Employes  Association, 
methods,  180 ;  branch  meeting, 
188;  Conference  (1905),  Mr.  Keir 
Hardie,  M.P.,  at,  188 

Municipal  Housing,  XIII.,  200 

Municipal  Journal,  on  allowance  for 
depreciation,  64 ;  admission  that 
municipalities  resist  progress,  174 

Municipal  Labour-Socialist  Party,  11 

Municipal  Powers  Bill  (1906),  11 

Municipal  Reform  Act  (1835),  effect, 
176 

Municipal  Trading,  History  of.  III., 
23  ;  Extent  of,  IV.,  32 

Municipal  trading  and  banking, 
Trades  Union  Congress  (1905),  re- 
solutions, 189  ;  Conclusions,  314 

Municipal  Works  Departments,  XIV., 
218 

Municipalisation  a  step  to  nationali- 
sation, Mr.  P.  J.  Tevenan  on,  188 


332 


Index 


Mun icipa lisa Hon  by  Provinces,  Fabian 

pamphlet,  313 
Municipalisation     of     the     "Drink 

Traffic,"  XIX.,  305  ;    Conclusions, 

325 
Municipalism  and  Marxists,  3 


National  Character  and  Progress, 
Effect  upon,  X.,  136  ;  Conclusions, 

315 

National  Civic  Federation  Report, 
municipal  employes'  circular,  183 

National  Housing  Reform  Council, 
President  on  housing  and  profits, 
210 

National  Telephone  Company  and 
municipal  enterprise,  37 

Nationalisation  the  end  of  municipali- 
sation, Mr.  P.  J.  Tevenan  on,  188 

Nettlefold,  Councillor  J.  S. ,  on  muni- 
cipal trading,  104  ;  on  Birmingham 
housing,  210;  pamphlet,  211 

Nettleton,  Mr.,  on  trusts,  169 

New  Heptarchy,  II.,  13 

Noble,  Captain,  protest  against  de- 
fective guns,  112 

North  Woolwich  drainage  system, 
excess  of  cost,  224 

Nottingham  ratepayers'  meeting  and 
municipal  employes,  196 


Old  Age  Pensions  Act  (1908),  4,  270 

Opposition  to  Inquiry,  V.,  40 

Ordnance  Department,  official  in- 
competence, no 

Outdoor  Rehef,  London  and  Poplar 
figures,  272 

Outdoor  Relief  (Friendly  Societies) 
Act  (1894),  270 

Overcrowding,  202 

"  Over- men,"  Fabian  dream,  19 


Paris,  experience  of  free  meals,  261 

Paris  electric  lighting,  240 

Paris  Gas  Company  {1870),  charter, 

238 
Paris  national  workshops  experiment, 

292 
Paris  omnibus  and  tram  service,  241 
Pawnshops,  municipal,  38 
Peat  and  Pixley,  Messrs.,  report  on 

L.C.C.  tramways,  56 
"  Permeation  "  policy  described,  5 


Personnel'vci  municipal  councils,  decay 
in,  99 

Pixley,  Mr.  F.  W.,  on  allowance  for 
depreciation,  62 

Plan  of  campaign,  Socialist,  i 

Policy,  An  Alternative,  XV. ,  231 

Politics  and  Labour,  XII.,  178 

Poor  Law  Commission,  Report 
(183s),  268 

Poor  Law,  Socialism  in,  XVII.,  267 

Poor  Law  System,  Conclusions,  322 

Poplar,  frauds  on  outdoor  relief,  299 

Poplar,  Mr.  J.  Burns,  M.P.,  on 
women's  workshop,  288 

Poplar,  pauperism,  statistics,  272  ; 
cost  of  State  child,  275 ;  street- 
laying  policy,  286 

Post-Office  an  apparent  success,  126; 
explanation,  127 

Post-Office  and  telephones,  37 ;  op- 
position to  telephones  and  wireless 
telegraphy,  162 

Preece,  Mr.  W.  H.,  on  Electric 
Lighting  Act  (1882),  153 

Price  and  Quality  of  Service,  VII. ,  83 

Primrose,  Sir  J.  U.,  Lord  Provost, 
on  municipal  employes,  194 

Private  and  public  enterprise.  Con- 
clusions, 315 

Profits  and  rates,  45 

Progressive  majority  on  first  London 
County  Council,  how  obtained,  6 

Progressive  Socialists  and  corruption, 
132 

Progressive  theory  of  municipal  em- 
ployment of  labour  v.  contractors, 
222 

Progressivism ,  Municipal  Trading,  24 

Proudhon,  M.,  on  "monster  of 
democratic  Socialism,"  301 

Proudhon,  M.,  on  "  right  to  labour," 
292 

Public  Accounts  Committee,  criticism 
of  Admiralty,  126 

Public  versus  Private  Enterprise, 
VIII.,  96 

Public-house.    See  Drink  Trafific 


Question  of  Monopoly,  XL,  164 


Radical  and  Liberal  Associations, 

"permeation"  policy,  5 
Rae,    Mr.,    on    State   industrialism, 

109 


333 


Socialism  in  Local  Government 


Rates  and  profits,  45 

Rayleigh,  Lord,  on  profits  of  electric 
lighting,  154 

"  Readjustment  of  social  environ- 
ment," Socialist  fallacy,  139 

Relief  (School  Children)  Order  (1905), 

4 
Returns  of  electricity  supply,  155 
Returns  (Local  Government    Board) 

of ' '  reproductive  "  undertakings,  47 
Returns,      Parliamentary,      cost     of 

public  lighting,  90 
Revolution,  danger  from  absence  of 

Poor  Law  relief,  discussed,  268 
Revolutionary  Socialism,  2 
Ridgeway,  Professor  W.,  on  tendency 

of  modern  legislation,  316 
Right  to  Work  Bill,  302 
"  Right  to  Work,"  Conclusions,  323 
"  Right  to  Work"  doctrine,  12 
"Right   to   Work,"    Labour   policy, 

193 
Right  to  Work,  The,  XVIIL,  276 
Ripley  on  trusts,  168,  170 
Ritchie,  Professor,  on  individuals  and 

environment,  140 
Ritchie,   late   Mr.   C.  T.  (afterwards 

Lord  Ritchie),  Act  of  1888,  8 
Rosebery,  Earl  of,  K.G.,  on  old  age 

pensions  scheme,  271 
Rowe,  Professor  L.  S.,  on  German 

street  railways,  244 
Royal  Commissions.    Under  separate 

headings 
Russell,   Lord  John,   and  ale-house 

licenses,  305 


Saint,      Councillor,      question     on 

Islington  lighting,  59 
St.  George's  in  the  East,  cost  of  State 

child,  275 
Saint-Simon,  a  founder  of  Socialism, 

293 
Salisbury,    Marquess  of,   on  Govern- 
ment helplessness,  130 
Salisbury,   Marquess  of,  on  terms  to 

lighting  companies,  151 
School  children,  legislation,  4 
Schooling,  Mr.  H.  Holt,  on  allowance 

for  depreciation,  61 
Scott,  Mr.  C.  J.  Cater,  on  tramway 

expenditure,  53 
Select    Committee    on     Feeding    of 

School  Children  (1906),  report,  254, 

256 


Select  Committee  on  Repayment  of 
Loans  by  Local  Authorities  (1902), 
on  depreciation,  66 

Sellers,  Miss  E. ,  on  cost  of  State 
children,  275 

Service,  Price  and  Quality  of,  VIL,  83 

Shaftesbury,  Lord,  Act  (1851),  201 

Shaw,  Mr.  A. ,  on  Paris  Gas  Com- 
pany, 239 

Shaw,  Mr.  A.,  on  German  municipal 
control,  244 

Shaw,  Mr.  G.  Bernard,  on  Fabian 
methods,  5,7;  on  municipal 
Socialism  prevalent,  7 ;  on  muni- 
cipal trading,  23,  24 ;  on  municipal 
accounts,  61 ;  on  advantage  of 
public  enterprise,  83  ;  on  municipal 
inertia,  104  ;  on  trusts,  166  ;  on  as- 
sumed success  of  municipal  elec- 
tricity, 173  ;  on  housing  difficulties, 
203 

Sheffield  "  Labour  Representation 
Committee"  municipal  programme, 
190 

Sheffield,  municipal  credit,  rates  and 
interest,  79 

Sheffield,  Works  Depai-tment  failure, 
230 

Sinking  fund  and  depreciation  allow- 
ance, 63 

Snowden,  Mr.  Philip,  M.P. ,  on  drink 
traffic,  306,  307,  326 

Social  Democracy  distrusted  by  Ad- 
ministrative Socialists,  18 

Social  Democratic  Federation,  ob- 
jects, 3 

Social  Democrats,  2 

Socialism,  Administrative,  i 

Socialism  in  Education,  XVL,  246 

Socialism  in  the  Poor  Law,  XVH. , 
267 

Socialist  Party  of  Great  Britain,  3 

Socialist  Poor  Law  programme,  271 

Socialist  scheme  of  temperance  re- 
form, 311 

Socialist  view  of  local  government, 
231 

South  African  War,  adverse  reports 
on  stores,  124,  125 

South  Australia,  cost  of  pauper  child, 

27s 
South    Ockendon    Colony,    Mr.    J. 

Burns  on,  287 
Spencer,   Mr.    Herbert,   on    parental 

and  civic  responsibility,  263 
State  Enterprise,  Lesson  of,  IX.,  109 


334 


Index 


State  interference  and  Individualism, 
discussion,  136 

Steamboats,  L.C.C. ,  probable  effect 
of  referendum,  103 

Steamboats,  municipal,  38 

Stepney,  road-sweeping  policy,  286 

Strikes  under  municipal  trading,  197 

Sullivan,  Mr.  J.  W. ,  and  Professor 
J.  R.  Commons,  report  on  "  Labour 
and  Politics,"  193 

Summary  of  conclusions  on  public 
and  private  enterprise,  107 

Summary  cf  financial  aspects  of  muni- 
cipal trade,  82 

Summary,  prices  under  municipal  and 
private  enterprise,  94 

Suthers,  Mr.,  on  advantage  of  muni- 
cipal management,  83 

Suthers,  Mr.,  on  Government  enter- 
prise, 129 

Suthers,  Mr.,  says  corrupt  practices 
are  due  to  private  enterprise,  132 

Switzerland  Socialists  and  "  right  to 
work,"  302 


Telephone  services,  municipal,  15, 

37 
Temperance  reform,  Sociaust  scheme, 

3" 
Tenants'  leagues  and  councillors,  216 

Tevenan,  Mr.  P.  J.,  on  municipalisa- 
tion  and  nationalisation,  188 

Thomas,  M.  Eniile,  history  of  State 
workshops  in  France,  293 

Thompson,  Alderman  W. ,  on  housing 
and  profits,  210 

Todmorden  Corporation  motor  buses, 

38 

Torrens,  Mr.,  Act  (1868),  201 

Tottenham  housing,  207 

Totterdown  housing  scheme,  loss,  207 

Town-Planning,  Housing,  &c. ,  Bill 
(1908),  213 

Town's  meeting,  abuses,  196 

Trades  Councils  and  municipal  elec- 
tions, 190 

Trades  Unions  and  contractors,  221 

Trades  Union  conferences  and  collec- 
tivism, 10 

Trades  Union  Congress  (1905),  reso- 
lutions, 189 

Trades  Union  Congress  (1906),  and 
municipal  employes,  185 

Trades  Union  wages  and  conditions, 
179 


Traffic  Commission,  206 
Tramways  Act  (1870),  effects,  144 
Tramways     and     Electric    Lighting 
Acts,  hindrances  to   development, 

23s 

Tramways  and  local  government,  234 

Tramways  and  L.C.C,  14 

Tramways  and  motor  buses,  muni- 
cipal, 38 

Tramways,  Berlin,  242 

Tramways,  electric,  and  local  authori- 
ties, 148 

Tramways,  municipal,  leased  to  com- 
panies, profits,  80 

Tramways,  recommendations  of  coun- 
cillors to  secure  posts  on,  194,  195 

Tramways,  restrictions  and  opposi- 
tion, 144 

Tramways,  returns  of  cost,  93 

Tramways,  unjust  comparison  of 
company  and  municipal  manage- 
ment, 86 

Tramways,  widenings  and  improve- 
ments omitted  from  accounts,  52 

Treasury  control.  Lord  Welby  on, 
130 ;  Sir  J.  E.  Gorst,  M.P.,  on,  131 

Trust,  definition  of,  164 

Undertakings  by  municipal  autho- 
rities, 33 

Unemployed  Act  (1905),  270,  280; 
Mr.  J.  Burns  on  failure,  286 

Unemployed,  Sheffield  L.R.C.  pro- 
gramme, 190 

"  Unemployed  Workmen"  Bill,  4, 
277 ;  Mr.  J.  Burns  on  effects,  286 

"  Unfit  "  problem,  dangers,  263 

United  States,  municipal  corruption, 
199 

Unskilled  labour  and  municipal  coun- 
cils, 186 

Unskilled  workmen  and  Poor  Law 
relief,  report,  283 

Vested  interests,  municipal,  effects 
of  monopoly,  175 

Voluntary  Care  Committees  and  feed- 
ing of  children,  259 

Voting  power  not  possessed  by 
hmited  liability  companies,  175 

Wandsworth,  Mayor  of,  on  muni- 
cipal tramways'  competition  with 
railways,  77 


335 


Socialism  in  Local  Government 


War  Office,  Lord  Randolph  Churchill 

on  armaments,  \ii  ei  seq. 
Water  supply  and  local  government, 

234 

Water  supply,  creation  of  Board,  14 

Watt,  James,  and  popular  prejudice, 
142 

Webb,  Mr.  Sidney,  on  "unconscious 
Socialism,"  5  ;  tactics  described  by 
Mr.  G.  Bernard  Shaw,  6 ;  expan- 
sion of  Socialism,  7 ;  vision  of 
"industrial  peace,"  197;  on  col- 
lective organisation  and  individual- 
ism, 222 ;  on  educational  system, 
248 

Welby,   Lord,   on  Treasury  control, 

130 

Wells,  Mr.   H.  G.,  on  Fabian  local 

government,  22  ;  on  drink  traffic, 
306 
West  Ham,  Works  Department  fail- 
ure, 230 


West  Ham  Poor  Law  administration, 

272 
Westminster  Review  article  on  naval 

construction,  iig 
West  Riding,  report  on  class  created 

by  relief  work,  281 
Wethered,  Mr.  E.  B. ,  on  Poor  Law 

administration,  283 
Wheatley,    Alderman,    on    Sheffield 

municipal  credit  and  interest,  79 
Wovian   Socialist,    The,  on  children 

and  the  State,  246 
Wood,  Mr.  Charles,  on  gas  under- 
takings, 88 
Woolwich,  cost  of  State  child,  275 
Woolwich  gun  factory,  history,  in 
Work,  The  Right  to,  XVIII.,  276 
Working  Classes,  Housing  of  the,  200. 

See  also  Housing 
Works    Departments,    Dangers    of, 

215;  XIV.  ,218;  Conclusions,  319 
Workshops,  State,  in  France,  292 


Printed  by  Ballantvnh  Hanson  &"  Co. 
Edinburgh  <5r»  London. 


This  book  is  DUE  on  the  last  date  stamped,  below 


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